The vast majority of logs sold, in British Columbia, Canada, and elsewhere, go to the sawmilling industry for lumber production. With this year’s lockdown due to COVID19 then ramp-up of manufacturing, lumber prices swooned down drastically in spring and are now surging back up with powerful momentum, according to Madison’s Lumber Reporter.
A large proportion of lumber produced in Canada goes into US home building. Like lumber prices, housing construction in the US underwent a significant stall in spring. And, like lumber prices, it is recovering steadily from severe lows.
Since Madison’s Lumber Price data comes out weekly, but US housing starts data is released monthly, there is always a lag between actual building activity and the US Census Bureau data release. However, during this unprecedented time of upheaval on multiple fronts, lumber prices are proving to be an excellent forward indicator of US home building.
