Canadian lumber rising to new heights
Thursday 1 Apr 2021
“At the top of the list of commodity prices rising is lumber and what we have seen is a really hot housing market both in terms of new construction and renovations and also in the resale market,” said Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA).
“There was a slow down early on (in the pandemic) with everything shutting down but housing came back very quickly as people showed that they place high importance on home. Everybody started looking at, do I have enough space? Do I want to renovate my existing space?”
The pandemic accelerated the shortage of housing supply and pent-up demand that already existed, he pointed out, adding the housing market in Canada and the United States took off last summer. “The U.S. relies heavily on Canadian lumber, so with all of that housing activity and that shortage of housing supply and all of a sudden the dam sort of bursting surprisingly through COVID, there is a scarcity of lumber,” said Lee.
“The lumber mills in Canada and the U.S. slowed right down early in the pandemic but the housing market rebounded faster than the mills got back up and running. With the integrated North American market, you are really seeing the shortage really affect price, so we’ve seen lumber prices skyrocket and that hasn’t abated.”
Patricia Mohr, an economist and commodity market specialist, said the Scotiabank Commodity Price Index dropped to a very low level in April 2020 following the outbreak of COVID-19 but began to rally in May and is now up a strong 21.2 per cent year-over-year as of January 2021. The forest products sub-index has led the way with a 53 per cent gain year-over-year.
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