Lumber prices begin to drop after record high

After climbing to record highs, lumber prices are finally starting to fall.

The long-awaited break in the wood products market already is creating ripple effects in the Flathead Valley's economy.

This week, Brent Hartley at Western Building Center said prices decreased as much as 20%. That's compared to the astronomical costs in March, April and May that came as a result of pandemic-related closures at wood manufacturing centers.

Demand for housing and do-it-yourself projects also contributed to the rise in wood prices over the past few months.

From March 2020 to May 2021, the futures price of lumber got five times more expensive, jumping from $303.40 to $1,607.50 per thousand board feet, according to data supplied by the Nasdaq.

But those stunning figures declined this month, as manufacturing began to catch up with demand.

Lumber futures dropped to $774 on June 25, their lowest mark since January.

Local consumers already can see some effects of that price decrease, Hartley said. But he anticipates it will be a while before buyers really start to notice a change.

"They are coming down, but it takes a little bit of time to trickle into the market," he said.

Wood sales function a lot like oil prices, he said. The cost of crude oil doesn't take effect at the gas pump right away.

Wood prices don't fluctuate consistently across the board, either.

Two-by-fours, for instance, are experiencing rapid price reductions. Sheathing, meanwhile, isn't decreasing at the same rate.

Hartley said a standard piece of oriented strand board, or OSB, sheathing, which cost around $8 to $12 prior to the pandemic, is still at $70 right now.

OSB prices finally have stopped their upward trajectory, Hartley said, but they haven't started to fall just yet.

In fact, Hartley expects the current declines will be short-lived. He anticipates lumber prices will explode yet again in response to the price drops, although he doubted they will reach as high as they were in the past months.

"I don't think it's going to be long-lasting," he cautioned. "Everybody needs more wood."

THAT INCLUDES local builders, who are wrestling with a sudden real estate boom in the Flathead.

Construction timelines have been hampered by the ebbs and flows of the lumber industry, and it appears they aren't out of the woods yet.

Bear Barinowski, with Malmquist Construction, said the custom home builder has yet to see wood prices make a direct impact in its business.

Even though prices are decreasing and hard-to-find wood products are becoming more accessible, Barinowski said the improved conditions are generating more interest for people looking to build. Homes over the $2 million mark, in particular, seem largely unaffected by market trends, he noted.

"It's gotten people excited that you can build a house here," he said. "We have a genuine enthusiasm for this building climate."

In Barinowski's view, there are still advantages to building in Northwest Montana versus other, more populated areas such as Bozeman.

Although Malmquist has experienced some delays getting products, Barinowski reported local retailers managed to avoid completely running out of much-needed items.

Home building is much the same way, Barinowski said. It's possible for buyers to find what they're looking for locally, but they should be willing to wait.

Reporter Bret Anne Serbin may be reached at 406-758-4459 or bserbin@dailyinterlake.com.