As lumber producers have struggled to keep pace with the outsized demand for new housing, the 300% YOY jump in lumber prices is pushing both new and existing home prices to skyrocket.
The median price of an existing home rose a record-breaking 17.2% in March, according to Stephen Culp with Reuters. At the same time, in its most recent earnings call, D. R. Horton reported that its quarterly profit had nearly doubled.
[D.R. Horton] said on its earnings call that lumber prices might see some relief as mills re-open and the international trade picture improves. Pultegroup is due to report on April 27, while Lennar Corp and Toll Brothers Inc are expected to post results on May 5 and 25, respectively.
In the meantime, “the builders’ margins have done fine,” says Dustin Jalbert, senior economist and lumber industry specialist at Fastmarkets in Burlington, Massachusetts. “What does that tell us? The costs are being passed on to the homebuyer.”
Whether those costs will dampen demand is an open question, but a report from the Commerce Department released on Thursday showed sales of newly constructed U.S. homes jumped by 20.7% last month to an annualized rate not seen since 2006, the zenith of the housing bubble.Read More