Analysts say recent softening of record high prices for lumber could translate into a little relief for homebuyers and do-it-yourselfers while continuing to spur high profits for producing companies.
RBC analyst Paul Quinn says a US$14 drop to US$941per thousand board feet in the North American framing lumber composite price on Friday represents the first weekly decline noted by industry watcher Random Lengths since April 10. In the same week last year, the price was US$367.
He says declines could be expected to continue in coming weeks, but pointed out the November lumber futures contract increased US$28 over the same week to US$607 per thousand board feet.
Kevin Mason, managing director of ERA Forest Products Research, says prices are levelling off after hitting record levels this summer because price-conscious buyers are delaying projects and the peak summer construction season is drawing to a close.
However, he said the change in prices will simply drop lumber producers from "astonishingly profitable" to "remarkably profitable" levels, adding he expects robust financial results for the remainder of this year and likely through 2021.
Random Lengths reported that oriented strand board, a panel product commonly used to sheath new houses, was unchanged on the week at US$690 per thousand square feet, up from US$218 a year ago.
Homebuilders say forest product increases this year have added as much as $10,000 to the cost of building a typical single-family house in Canada.
This report by The Canadian Press was first published Sept. 28, 2020.