Lumber Prices Reach 36% YoY Increase Amid Seasonal Demand

Lumber prices have increased by 36% YoY, with the CME physically-delivered Lumber Futures contract reaching $616.00 per 1,000 board feet on June 20, 2025. Prices often peak in the first half of the year due to seasonal demand, and last year's prices bottomed in early July at $449.00 per 1,000 board feet. The recent surge was driven by supply constraints and a pickup in housing starts during the pandemic.

Lumber prices have surged significantly in recent months, with the CME physically-delivered Lumber Futures contract reaching $616.00 per 1,000 board feet on June 20, 2025. This marks a 36% year-over-year increase, a trend that is primarily driven by supply constraints and a resurgence in housing starts, particularly during the pandemic [1].

The recent surge in prices is not unexpected, as lumber prices often peak in the first half of the year due to seasonal demand. Last year, prices bottomed in early July at $449.00 per 1,000 board feet, reflecting a period of lower demand and ample supply [1]. However, the current market conditions have led to a significant uptick in prices, driven by a combination of factors.

One of the primary drivers of the current price surge is the supply constraint. The demand for lumber, particularly for softwood species like Spruce-Pine-Fir, has shown encouraging signs, while Southern Yellow Pine prices continue to search for a bottom [1]. The week ending June 6, 2025, saw the benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) priced at $450 mfbm, a 1% increase from the previous week [1].

The housing market has also played a significant role in the recent price increase. While U.S. housing starts pulled back sharply in May, the Canadian housing market has shown strong growth. Canada's housing starts jumped to 280,000 annualized units, outpacing expectations and last month’s figures, indicating a robust market rebound [4]. This growth, combined with a 3.6% rise in home sales, reflects a vibrant housing sector and contributes to the overall demand for lumber.

Despite the recent price surge, the outlook for lumber prices remains mixed. The bullish case suggests that lower interest rates could increase demand for new home construction, while the bearish case points to potential challenges posed by elevated interest rates and the U.S. debt. The Fed's decision to keep the short-term Fed Funds Rate unchanged at the June FOMC meeting further highlights the uncertainty in the market [2].

In conclusion, the recent surge in lumber prices is a reflection of the complex interplay between supply constraints, seasonal demand, and housing market dynamics. While the current trends suggest a bullish outlook, investors and financial professionals should remain vigilant to the potential risks and uncertainties in the market.

References:
[1] https://www.lumberbluebook.com/2025/06/17/madisons-reporter-lean-inventories-send-lumber-prices-slightly-higher-2/
[2] https://seekingalpha.com/article/4796009-lumber-prices-and-wood
[3] https://www.nasdaq.com/articles/us-housing-starts-pull-back-sharply-may
[4] https://finimize.com/content/canadas-housing-starts-defy-expectations-with-strong-growth