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07/21/2021

Mid-Cape Home Centers provides a lumber update

The Massachusetts pro dealer says mass media sound bytes can be misleading.
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In its latest newsletter, Mid-Cape Home Centers provided customers with an update on the state of the lumber and building materials industry pricing, along with supply chain issues.

The 125-year old pro dealer serves the Cape Cod, the South Shore and Islands regions of Massachusetts and beyond.

And despite mainstream media providing sound bytes on to the theme that lumber prices are skyrocketing while panel prices are falling, Mid-Cape says the overall info being shared by the media can be “misleading.

Here’s what Mid-Cape Home Centers had to say about the current climate in lumber and building materials:

We’re all hearing more about the lumber market in the news than we ever used to – the mainstream media has become commonplace to hear things like “lumber prices are skyrocketing” followed just months later by “falling panel prices” and “lumber futures”, something usually reserved for commodity traders and lumber buyers. On one hand, it’s great to see some attention being paid to the issues our industry is facing, but it’s also simplifying a complex supply chain into a sound byte, and that can be a little misleading to the consumer.

First and foremost, it's true – lumber prices ARE coming down. We’ve been able to drop the price on an 8’ 2x4 by over 40% since the height of the inflation in May, and the prices in the lumber market are still dropping – panel prices were slower to drop, but are now also starting to come down. This is long overdue good news. Just as suppliers and local yards followed the market price of lumber on the way up, we’re now following it down as quickly as we can - it takes time for these things to work their way through the supply chain. This isn’t new either – Mid-Cape has been watching and reacting to the changing lumber market like this since long before the pandemic even started. It’s only because the last year was so volatile that so much focus has been on it!

The other positive is that some of the supply challenges that we’ve been experiencing are getting better – lumber mills are catching up on the backlog of production and material is more available now than it has been over the past year. There will always be pockets of items that are hard to get (White Cedar shingles anyone?), but in general more material means lower prices.

However, when everyone talks about the falling prices or the market crashing they may be right, at this moment, but we must remain cautious going forward – there are several things to watch out for that may keep the prices from falling too low, or even going back up:

  • Wildfires – there are currently over 50 uncontained large fires in the western US, and studies show that area to be the driest it’s been in 20 years. A repeat of last year’s damage would cause disruption to a very fragile supply chain and likely drive prices up
  • Labor – we’re still not out of the woods with COVID, and production facilities are constantly at risk for an outbreak that would sideline them during critical production ramp-up times. Any shutdowns would cause supply shortages. This is particularly concerning with the latest news of the highly contagious Delta variant.
  • Freight – the national trucker shortage continues to drive transportation costs up. Also, the backups at our nation’s ports are simultaneously increasing costs and extending lead times
  • Continued High Demand – Housing Starts nationwide in May were up roughly 50% from 2020, and with interest rates at an all-time low people are continuing to build.
  • Natural Bounce-back – in the past, significant downward price movements have often bottomed out and then bounced back upward as buyers load up on material, which we anticipate will happen again soon.

So, let’s all celebrate the fact that we may be seeing a return to the old days and that the industry’s prices are coming down. That’s great news for everyone – but let’s also remember that we’re dealing with a commodity market in an environment that is still nowhere near “normal” yet – the current trend is good for prices, but beyond that all we can do is commit to reacting quickly and ensuring an honest price for you at the right time.