Lumber prices drop sharply in U.S. amid cooling housing market

Lumber prices have fallen to their lowest weekly level in nearly five years as the slowdown in the U.S. housing market dries up demand for building products, The Wall Street Journal reported Wednesday.

As of Friday, weekly composite prices per thousand board feet of framing lumber had fallen to 274 dollars from 401 dollars a year earlier, according to Random Lengths, an industry newsletter.

On an average monthly basis, prices are at their lowest levels since mid-2003.

The 32-percent plunge is far steeper than industry executives predicted, resulting mostly from a sharper-than-expected falloff in housing activity.

The Commerce Department reported last month that housing starts dropped 6 percent in August from a month earlier to a seasonally adjusted annual rate of 1.665 million units. That was the fifth decline in construction starts in the past six months and the slowest rate of starts since April 2003.

As a result, producers are racing to try to curtail production in mills, as industry profits have been pummeled. Prices of other building materials, like gypsum and cement, have also fallen or moderated in tandem with the slackened demand.

So far this year as of Monday, forestry and wood stocks tracked by Morningstar Inc. have fallen 4.3 percent, compared with an 8.9 percent rise in the Dow Jones Industrial Average over the same period.

Source: Xinhua