Lumber prices soften as interest rates rise

“Buyers don’t have the same mentality of having to go out and buy 10 when they only need five,” Ash Boeckholt, co-founder and chief revenue officer at online wood-products marketplace MaterialsXchange, told the Wall Street Journal.

The combination of elevated rates, supply shortage, and extremely high home prices have started to take their toll on the housing market.

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The 30-year fixed-rate mortgage averaged 5.1% last week, well above the 3.11% level at the end of 2021. This has dampened new and pending home sales, which were down 16.6% and 3.9% in April, respectively. Housing starts also slowed to an annualized pace of 1.72 million, data from the Census Bureau showed.

According to the National Association of Home Builders, extremely volatile lumber prices during the past year have caused the average price of a new single-family home to increase by more than $18,600.