Jan 7, 2022 - Economy

Don't blame COVID for rising lumber prices

Data: CME; Chart: Axios Visuals
Data: CME; Chart: Axios Visuals

Lumber prices are rising again, but this time you can't blame the pandemic.

Why it matters: Blame climate change instead. Extreme weather in Canada drove the increase — a sign that even when the pandemic recedes supply chains are still going to be funky.

  • December was warmer than usual in many areas of the U.S., so home builders — frantically ramping up to meet demand — kept building, Stinson Dean, CEO of Deacon Lumber in Kansas City, Mo., tells Axios.
  • Meanwhile, Biblical-level flooding in British Columbia derailed supply from up north and messed up the rail lines that typically deliver lumber.

"When folks in the industry saw rail lines were destroyed...everyone panicked and started buying what they could get their hands on," Dean said.

Flashback: Rising lumber prices became something of a poster child for the high inflation economy last spring. Increased demand for houses and home renovations collided with low supply, thanks to pandemic-idled sawmills — other supply chain snarls didn't help either.

  • When the price receded in June, Fed chair Jerome Powell pointed to it as a sign that high inflation would "start to abate" — a comment that in hindsight was too hopeful.
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