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Illustration: Eniola Odetunde/Axios

Lumber prices are shooting up again — extending the commodity’s wildest stretch ever.

Why it matters: The housing market (and home remodeling) has boomed — creating historic demand for lumber that hasn’t let up.

  • This unexpected effect of the coronavirus economy has played out in the futures market since the onset of the pandemic.

What’s they’re saying: "If people bet prices were going to go lower, they were wrong and so now they kind of have to chase the market," says Alex Mead, a lumber consultant at StoneX Group.

  • "The people I work with, they're not lumber producers. They just want to buy lumber on paper because they think it's going to go up," says John Payne, a futures broker at Daniels Trading.

Flashback: Lumber prices soared, hitting their highest level ever in September — a run that far outpaced any seasonal surge the commodity has ever seen.

  • Then there was a "big correction to the downside, but we're still at significantly higher price levels than people are accustomed to," says Greg Kuta, founder of Westline Capital Strategies, which focuses on lumber futures.
  • Now: There’s unseasonably good weather, allowing builders to keep working (and keep up demand for lumber) — bucking the typical slowdown this time of year when prices bottom.

Catch up quick: Lumber producers ramped down when COVID-19 hit — partly because they had to in order to comply with lockdown orders, partly because orders were canceled and demand was expected to plunge.

  • Yes, but: Locked down Americans took on lumber-involved DIY projects. The housing market took off.
  • "There's a shortage of existing homes and new homes. There's all this demand and record low interest rates. You've got all these drivers pushing demand and you still don't have the supply to satisfy demand," Katu says.
Data: FactSet; Chart: Axios Visuals

The fallout: The high prices reflected in the futures market are "passed on directly to consumers, whether you're buying lumber yourself at a big box store or you're buying a new house," Pete Stewart, the founder of lumber analytics firm Forest2Market, tells Axios.

  • The National Association of Home Builders estimated earlier this year the spike in lumber prices increased the price of a single-family home by over $16,000.

A big question: How much longer the consumer will be able to absorb the high prices, before demand slips.

The latest: Lumber (and wood) is the most reported material shortage among commercial contractors — and the problem is getting worse.

  • One in 3 contractors say they don't have enough — up 20 percentage points from last quarter, according to survey results from the U.S. Chamber of Commerce Commercial Construction Index, first provided to Axios.

Go deeper

U.S. home prices march upward

Illustration: Sarah Grillo/Axios

Middle-income housing across America — particularly in big coastal cities — is growing scarcer than ever, as the wealthy bid up properties that might once have been considered "affordable."

Why it matters: The pandemic's effects on the housing market may turn out to be permanent — and could widen the gap between rich and poor. Renters and buyers alike face rising prices that outstrip income growth and favor people with cash savings.

Sen. Sheldon Whitehouse under scrutiny for elite club affiliations

Sen. Sheldon Whitehouse during a Senate hearing on Capitol Hill in February. Photo: Susan Walsh-Pool/Getty Image

Sen. Sheldon Whitehouse (D-R.I.) said in a statement Wednesday that he is a member of an exclusive Rhode Island sailing club that lacks diversity.

Why it matters: Whitehouse has repeatedly spoken out against systemic racism and come under scrutiny this week for his family's affiliation with elite clubs. This is the second such club accused of lacking diversity that the senator has been linked to in recent days

3 hours ago - Politics & Policy

Scoop: Border Democrats want migrants vaccinated

Rep. Filemon Vela (D-Tex.) Photo: Chip Somodevilla/Getty Images

Some Democrats representing border districts want President Biden to vaccinate migrants crossing into the U.S. — especially if he lifts public health restrictions that have prevented them from claiming asylum on American soil.

Why it matters: Inoculating migrants treads a fine line of protecting the U.S. population while possibly incentivizing more migration with the offer of free COVID-19 vaccines. Republicans are likely to pounce on that.

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