Strange Economic Indicators We Watch

Casey Fleming

Here’s a fun quick one from my favorite economics blog, Calculated Risk, as part of a continuing series on weird economic indicators that we watch that impact housing:

Sunday, August 09, 2015
Update: Framing Lumber Prices down Year-over-year

by Bill McBride on 8/09/2015 10:36:00 AM

Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs.

Why are lumber prices falling?
Why are lumber prices falling?

The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).

Prices didn’t increase as much early in 2014 (more supply, smaller “surge” in demand).

In 2015, even with the pickup in U.S. housing starts, prices are down year-over-year. Note: Multifamily starts do not use as much lumber as single family starts, and there was a surge in multi-family starts.

Overall the decline in prices is probably due to more supply, and less demand from China.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through July 2015 (via NAHB), and 2) CME framing futures.

Right now Random Lengths prices are down about 14% from a year ago, and CME futures are down around 24% year-over-year.

Read more at http://www.calculatedriskblog.com/2015/08/update-framing-lumber-prices-down-year.html#1TWDDjojkjUQOABh.99

And for more great stuff on the economy and economic indicators in general, I highly recommend Calculated Risk.

Casey Fleming, Author The Loan Guide: How to Get the Best Possible Mortgage (On Amazon)
Mortgage Advisor, C2 FINANCIAL CORPORATION
408-348-3442 mobile
 
Follow me on Twitter for interest rate updates: @TheLoanGuide
 
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