Lumber Surges Anew as Supplies Shrink Ahead of Building Season

(Bloomberg) — Lumber is on a tear again, bringing back the specter of increasing construction costs.

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Lumber futures have recouped recent losses and risen by the exchange maximum of $45 for six consecutive sessions, touching $1,204.90 per 1,000 board feet Wednesday, the highest in three weeks. After prices slumped in January amid cold US weather and transportation bottlenecks, tight inventories ahead of peak building season are helping to fuel a rebound.

“Prices are well above trend pricing, as well as our own price forecasts,” Mark Wilde, an analyst at BMO Capital Markets in New York, said Wednesday in an email. “We are also just heading toward spring construction season and housing market activity, so it wouldn’t surprise me to see prices rally further.”

Wood prices have been volatile since the pandemic began and they touched record highs during a Covid-19 fueled building boom, then collapsed because sawmills ramped up production and high prices stifled demand. An index of framing composite has more than tripled since late August, adding to the cost of an average new home.

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