Lumber prices hit their lowest level since June 2020 on Monday as the housing market continues to slow. High mortgage rates helped slow home sales and pushed home prices down slightly. Homebuilder confidence fell for the 11th consecutive month in November to its lowest level in a decade. Something is loading.
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The continued slowdown in the US housing market has taken its toll on lumber prices, which fell to their lowest level since June 2020 on Monday.
The essential building commodity fell 9% in three days to a low of $382.80 per thousand board feet, below the $400 level that has served as key resistance since 2013. Timber rebounded slightly Tuesday, up about 5% to $411. Prices are down 64% since the start of the year.
Much of the weakness in lumber stems from the deceleration seen this year in all facets of the housing market, as soaring mortgage rates have helped slow sales, dampen home price growth and seriously shake the confidence of homebuilders.
The average 30-year mortgage rate currently sits at 6.5% according to data from Freddie Mac, which is below the recent high of 7.03%, but still around double the levels seen at the start of the year. . Soaring mortgage rates reduced affordability for new home buyers, leading to a significant slowdown in existing home sales.
In October, existing home sales fell 6% month over month, the ninth consecutive monthly decline, while existing home sales fell 28% year over year. other. And according to the Case-Shiller US National Home Price Index, home price growth has slowed for the sixth consecutive month in 2022.
All of this has dampened the outlook for US homebuilders, who are driving most of the demand for lumber as they embark on new construction projects. U.S. homebuilder confidence fell for the 11th consecutive month in November to its lowest level in a decade.
The report showed builders are adding more buying incentives to boost new home sales, signaling how higher mortgage rates have hurt potential buyers. Therefore, any reversal of the sharp rise in interest rates this year could have a strong effect on strengthening confidence in the US housing market.