quote:
Lumber prices traded below $1,000 per thousand board feet for the first time since March.

Lumber futures are now down roughly 40% from a record high set on May 10.

Prices are still up 175% over the past year, and experts say they could remain elevated from historic norms.

quote:
Part of the reason for lumber's recent skid is expanding supply. US lumber production has jumped 5% over the past 12 months with another increase of 5% on the way, according to Domain Timber Advisors LLC, a subsidiary of Domain Capital Group, per Bloomberg.

Business Insider

quote:
Economists and investors have wondered if sky-high prices for wood products would doom the booming housing market. Builders raised home prices and many stopped selling houses before the studs were installed, lest they misjudge costs and sell too cheaply. Lumber became central to the inflation debate: whether a period of runaway inflation was afoot or high prices were temporary shocks that would ease as the economy moved further from lockdown.

The rapid decline suggests a bubble that has burst and the question is how low lumber prices will fall. Even after tumbling, lumber futures remain nearly three times what is typical for this time of year. Lumber producers and traders expect that prices will remain relatively high due to the strong housing market, but that the supply bottlenecks and frenzied buying that characterized the economy’s reopening and sent prices to multiples of the old all-time highs are winding down.

During the run-up, wood was hoarded by builders, retailers and others worried about running out of material during a construction season set into overdrive by low mortgage rates and federal stimulus payments.

“Everyone was buying more than they needed,” said Mike Wisnefski, a former lumber trader and chief executive of online marketplace MaterialsXchange. “There was this fear of lack of availability.”

Now the market is being flooded by what Mr. Wisnefski calls shadow inventory as businesses that are normally big buyers, such as home builders and companies that prefabricate the trusses that hold up roofs and floors, sell from their own stockpiles.

WSJ

The problem was always a lack of production at the mills or not enough mills online as we have a glut of timber available. The USA lost something like 100 mills since the great recession. Of course, the mills we do have left were either shut down, had reduced production, and some can't find workers now. Canada, the largest exporter of lumber to the USA, had very draconian Covid shutdowns as well.

Large volume housing developers hoarding didn't help the average consumer. Hopefully, this bites them in the arse a little.

I have seen some people suggest when lumber prices go up they never come back down and that just isn't true. I remember years ago OSB reached around $16 per sheet which was up from $5, framing studs were $4 up from around $1.70, copper was $400 for a 1000' roll of 12-2 up from $120, etc and those prices eventually leveled back off. Will that happen again? Who knows as long as the Fed keeps rates artificially low helping to drive demand.

FWIW, OSB was $8'ish per sheet at the start of 2020 and studs were around $2.33 so in 10-12 years lumber hadn't really outpaced normal inflation rates prior to this spike.