Now 39 years into this lumber gig, there is one thing I have more confidence in than anything else. It is the foundation of my entire lumber career and reason for my success forecasting lumber market timing. The repeating lumber market cycle. Some of it sloshes around, yet, in spite of all the tsunamis thrown at it, the core remains solid. This is that core.
“Our lumber market’s peak jobsite demand period is April/May/June.” Everything else is built around that single repeating fact. I prognosticate around that core belief. A 2-part subset of that belief is this.
- April/May is when lumber buyers’ inventories peak and prices either top out or gain downward momentum.
- A seasonal 180-degree turn develops in response the real engine behind the lumber market. Roughly half of new home “production” builders’ peak lumber demand period is May/June. Why? Change in priorities. From January through June, all are thinking “housing starts.” From July through year end, all are thinking housing finishes. Can’t close until they are finished. Furthermore, 4 of the top 6 builders, 5 of the top 10 have earlier targets with fiscal year ends in September, October, and November. Regardless, the Q3 focus is not as much on lumber as it is paint, landscaping, and punch lists.
Before May is over, there is an obvious decline in calls for jobsite deliveries (which can be up to six weeks in advance.) The June convulsion is felt everywhere, regardless of geographic location. For single family builders, April/May/June’s focus is on high lumber needs to start. In July/August/September, the focus is on the finish, which requires less lumber.
Level Playing Field = Over-Priced Homes
There is this one guy who follows me all over social media, through industry publications, and getting a bootlegged LLG every once in a while. As soon as our lumber market does not go as forecasted, he is all over me. “Missed it again, hot shot.” Last fall, when $600 by spring 2018 was the call, he said, “Hang it up, pal. You are all washed up. Never gonna happen.” Then again a couple of weeks before Memorial Day, putting out the “$100 Crash by July 4th week” forecast, he said, “You never give up do you? A glutton for punishment.” This weekend he remarked, “Dang man, are you some kind of lumber psychic or are you on a lucky streak?”
I tell you that little story because, even though you all get identical forecasts every week, with full explanations of why, when, and how much, and still you all try to beat me. Not make me wrong, just do better. And I hope you do. I take it as a compliment and applaud you for looking deeper. That is what makes you a great lumber trader; not just a buyer or sales person...an accomplished trader of the lumber market.
Here is your next one to ponder. The Another Dimension, Seasonal 180 is the only reason I need to expect lumber and OSB prices to trade softer into late August and possibly late October. There will be an early summer July fill-in, followed by weakness into late August. Then the September Surge, possibly weakening into late October.
The number one objection to buying a new home today is price. Tariffs are pulling us the wrong way. It’s like putting a trade wall around the country that says, “Keep out, you and your kind,” and it globally feeds on itself until somebody gets their feelings hurt real bad. I get the level playing field concept, but no one does it, not even the USA.
Looking Forward ...ml
A veteran lumberman, Matt Layman publishes Layman’s Lumber Guide, the weekly forecasts and buying advisories that help component manufacturers save money on lumber purchases every day. You can reach Matt at 336-516-6684 or matt@laymansguide.info.