Lumber Prices Up 56% In One Month As Housing Market Roars
If you're looking for a cyclical indicator indicating an economic recovery, you need look no further than lumber.
Lumber prices have soared nearly 60% in the last month as the housing market recovers from its brief COVID downturn.
At $560, lumber is nearly back to its 2018 peak right before it fell all the way back to around $260.
With new home sales numbers rebounding strongly and mortgage applications already above pre-COVID levels on the heels of record low interest rates, commodities traders are liking what they're seeing. But it's not necessarily in line with what we're seeing from existing homeowners.
There's been data showing that roughly 30% of mortgage holders missed their July monthly payment. How can so many homeowners be threatening to default on their mortgage, yet mortgage seekers are showing up in record numbers?
Perhaps it's because the universe of those seeking a mortgage is limited to those whose jobs are safe, were able to work remotely or whose industries have been less affected by the recession. The existing homeowner universe consists of all workers, including those who've lost jobs, been furloughed or are otherwise unemployed at the moment.
Either way, lumber prices are indicating that at least certain segments of the economy are rebounding nicely.