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IS LUMBER FORECASTING THE NEXT LEG DOWN IN HOUSING?

14 May 2010 by Cullen Roche 2 Comments

In our recent housing outlook we mentioned the potential for weakness in lumber prices going forward as the housing stimulus ends and seasonality begins to turn bearish in the housing market. Lumber prices are 18% off their recent highs and still overbought after the sharp run-up on the back of the housing tax credit extension.  Like clockwork, however, prices have started to fall into and after the April 30th end of the tax credit.  We’ve seen some signs of a potential continuing decline in the Shiller housing data.  Are lumber prices leading the next leg down or is this just a dip in a continuing bull market?

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Comments
  • Todd Weir

    Lumber had high demand after the Haiti and Chile earthquakes, so the chart may not be related to US housing demand, but a dip after a temporary crisis needs.

    05/14/2010 at 6:26 AM
  • MattBlackman

    Interesting comment but it is nothing more than a comment without showing or discussing the historic correlation between lumber and housing. And are you talking about new or existing homes sales or prices?

    05/14/2010 at 1:50 PM