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Is the lumber bubble finally popping?

(WJW) – The lumber bubble has started to pop.

After skyrocketing to record highs in May, futures for July delivery dropped more than 40%. July futures were trading Tuesday at $967, compared to a peak of $1,670.50 in May.

Sherwood Lumber’s Kyle Little said prices had reached unsustainable levels.

The prices increased as restaurants created new outdoor spaces and homeowners completed new projects, leading to a shortage and a price hike.

The National Association of Home Builders said the increase was so high, it added about $36,000 to the price of a new home.

NAHB previously said the higher prices are a result of increased demand and restrictions in supply because of a lack of domestic production and lumber mill cutbacks.

Lumber futures traded back below $1,000 per thousand board feet this week for the first time since late March. However, now that prices are falling, homeowners are selling.

"When you have over a 400% price move in about a 15-month period of time, the volatility involved with that will lead to price adjustments like we are experiencing right now," Little told FOX Business.

Industry leaders say there are still supply chain issues in other areas.


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