Lumber prices remained near recent lows as construction on new homes fell while mortgage rates jumped.Housing starts dropped 14.4% in May from the prior month to a 1.55 million annualized rate, the lowest in more than a year.
Lumber prices remained near recent lows Friday as construction on new homes fell to the lowest in more than a year while mortgage rates hit a 14-year high.
Prices were hovering around $569 per thousand board feet, up less than 1% from Thursday, after recently dropping to their lowest point in nine months.
Lumber prices have tumbled more than 60% from highs reached in March, as the housing market cools in response to higher interest rates. On Wednesday, the
The rise in interest rates is a stark turnaround from recent years, when ultra-low
But an increasingly hawkish central bank has sent mortgage rates up as well, making homes less affordable and dampening demand for building materials like lumber.
The average 30-year fixed-rate mortgage climbed 25 basis points to 5.65% for the week ended June 10, the highest level since late 2008, the Mortgage Bankers Association said Wednesday. In addition, purchase applications have fallen more than 15% from a year ago.
Meanwhile, new construction is also down, with housing starts dropping 14.4% in May from the prior month to a 1.55 million annualized rate, the lowest in more than a year, the Census Bureau said Thursday. The amount of permit applications, a favored metric of future construction projects, fell to a nine-month low of 1.7 million.
Insider previously reported that 80% of buyers don't think it's a good time to buy a home in the current market. The pessimism comes as a Freddie Mac economist cautioned that the US housing market could contract as aggressively as it did in 2006.