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Lumber prices are up 232% and ‘might spiral out of control in the next

Recently the cost per thousand board feet of lumber soared to an all-time high of $1,188, according to Random Lengths. Considering that the onset of the pandemic, lumber has soared a tremendous 232%.

House home builders and DIYers do not want to hear this, but the ceiling might be higher– perhaps even a lot greater. On Monday, the May futures contract rate per thousand board feet of two-by-fours jumped $48 to $1,420. That squeeze when again set off the breaker and triggered lumber trading to halt for the day. Why would lumber lawns and contractors pay above market rates? Serious lumber shortage has buyers on edge. They’re buying the sky-high agreements in order to ensure they’ll in fact get the lumber they require for projects already under contract.

“The market is in difficulty. It might spiral out of control in the next couple of months,” Dustin Jalbert, senior economic expert at Fastmarkets RISI, told Fortune. The problem? Supply, which is currently backlogged, simply can’t catch up as need continues to grow with the start of the house structure and house restoration seasons.

This supply and demand inequality is mostly a result of the pandemic. At the very same time that state-mandated lockdowns triggered mills to stop production, tired quarantining Americans were hurrying to [hotlink] Home Depot [/hotlink] and Lowe’s to purchase up products for diy tasks. That triggered lumber inventory to plunge. It just worsened from there: Recession-induced record-low interest rates triggered a real estate boom. In March, brand-new housing starts hit their greatest levels given that 2006. Naturally, new homes require a great deal of lumber, thus intensifying the scarcity.

On the supply side, lumber production is finally rebounding: Wood production struck a 13-year high. But that can just do so much. Minimal mill capacity combined with labor lacks, suggest supply can reach robust need.

Stinson Dean, CEO of Deacon Lumber, told Fortune on Monday that soaring lumber futures contracts, including for months as far away as November, signal that lumber prices will rise for rather some time.

For prices to remedy, Jalbert says, need will require to cool off– something that is unlikely to take place up until the house structure and renovation seasons are over. Simply put, exuberant lumber prices aren’t going throughout the next couple of months.

This story was originally featured on Fortune.com

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