The price of lumber has dropped 3% today. It’s dropped 25% since October. It’s dropped 36% since mid-2013, which is when I have shown in several articles that unit volume in the housing market began to decline.
This has nothing to do with the expectation that the Fed might not raise interest rates after today’s horrible retail sales report. Unit home sales volume has been in a decline since July 2013 despite the Fed’s zero interest rate policy, record low mortgage rates, big reductions in down payment requirements my Fannie Mae and Freddie Mac, big reductions in mortgage insurance premiums by the FHA and the proliferation of zero down payment mortgages by the USDA: LINK
By the way, although the USDA states that its “no down payment” mortgage is for rural homebuyers, the definition of “rural” includes most lower-end housing communities that have sprung up less than 20 miles from big cities like Denver. Areas that used to be called “ex-urbs.”
The collapsing price of lumber is telling us the same thing as the collapsing Baltic Dry Index and the collapsing price of oil: this country is headed into a deep recession. Numerous recent economic reports, including today’s disastrous retail sales report, are showing economic activity that is now back to 2008/2009 levels.
The Fed is caught in a trap. The market manipulation is breaking down. The housing market is next….Homebuilder Research Reports. Click to enlarge: