Lumber prices drop as interest rates rise, home sales slow
For two years, Chris Carreira had a hard time keeping lumber in stock at Chace Building Supply on Washington Street. Demand for building materials skyrocketed during the pandemic and wood prices doubled and tripled because supply was low.
But rising interest rates are bringing those soaring lumber costs back down to Earth.
“They’re starting to come down drastically. In the last three or four months, the price is down 50 percent,” said Carreira, Chace’s general manager. “Pre-COVID, a two-by-six was probably $6-7 bucks. At the high point it was around $15-16, and now we’re under $10.”
Analysts say higher interest rates are driving down wood costs, slowing new home sales and having an impact on new construction. The rate of new residential building permits is down 14.4 percent from Aug. 2021, according to the Census Bureau.
“Obviously, raising interest rates is always going to slow business down,” Carreira said.
North Shore realtor Kevin Vitali does not believe falling lumber prices will have much of an impact on local housing prices, simply because there isn’t nearly as much new construction in Massachusetts as other parts of the country.
“Look at [the number of] all the new builds in Massachusetts. It’s almost nothing,” Vitali said. “People suspect this is going to impact housing prices. If it does, it’s going to be very slow. We’re not going to see much of anything.”
Carreira said most of his lumber is shipped down from Canada. This is another reason he said his prices are falling; there are no more COVID-19 restrictions at the border impacting quantity and shipments.
“The biggest thing is just trying to keep up with demand right now,” Carreira said.
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