In a May 19 report, Market Insider found that lumber prices fell to new lows in 2022 as April's existing home sales hit the lowest level since the start of the pandemic.
According to the report, lumber futures fell as much as 6% to below $700 per thousand board feet, its lowest level since November\. Quoting data from Finviz, a stock screener for traders, the Insider said that weakness in lumber can be attributed to a sharp rise in mortgage rates, which remain above 5% and have led to a slowdown in demand for homes from buyers.
April's existing home sales fell for the third straight month, dropping 2.4% from March levels, and down 5.9% from a year ago to a seasonally adjusted annual rate of 5.61 million. Due to the drop in demand, the inventory of unsold existing homes climbed to 1.03 million by the end of April.
But while the supply of homes is slowly on the rise, home prices are still moving higher, albeit at a slowing pace. The median existing home sale price increased 14.8% year-over-year to $391,200, according to data from the National Association of Realtors.
Worries are starting to grow that the invasion of Ukraine and subsequent sanctions will cause lumber prices to rise. The National law Reviews warned that prices could rise due to sanctions on Russia. Russia is a major exporter of wood in the global market, particularly in China and the European Union. If these countries restrict wood product imports from Russia, or if Russia refuses to export to them, the strain on global supply could drive domestic prices to new heights as Russia-dependent markets look for new sources of wood.
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