Editor
While prospective lumber customers continue to wait for lower interest rates before committing to new builds, lumbermen in the Southeast region noted that rates “might never return” to COVID-era numbers.
A Louisiana source said, “people haven’t gotten over the fact that there were such low interest rates (during the pandemic) and that was not the norm.”
He added that this “market instability” has led to his customers being “very price sensitive.”
“It is hand-to-mouth. Nobody is making any big investment,” said the lumber distributor. “People are watching their dollars very closely right now.”
He noted that the market for new homes slowed down in the third and fourth quarter of 2023.
“People are customizing their (current) homes,” he said. “There is not a lot of speculative building going on.”
A Tennessee source agreed.
“New construction has slowed down considerably,” he added. “There are lots of additions and people are trying to stay in their homes. So, they are replacing siding and other products like that.”
The source, who specializes in Yellow Pine, Spruce, Western Red Cedar and treated Pine, noted that a “slowdown” is normal during the fourth quarter.
“People are trying to get products in the dry before winter comes,” he said. “That is just seasonal. Inventory is low right now, real low.”
A lumberman in Georgia, who specializes in Cedar, Cypress, Ponderosa Pine and Spruce, called the trend “cyclical.”
“With inventory,” he said, “we don’t stock as much (in the fourth quarter).”
However, when asked if inventory would remain low due to concerned buyers into 2024, he said that he doesn’t “expect much of a difference in the first quarter of 2024.
“The interest rates are just dictating everything,” he explained, adding that lumber yards and distributors will hold more inventory once buyer confidence returns.
The Louisiana source, who primarily distributes Spruce and Southern Yellow Pine at an independent retail lumber yard, said that lumber companies are keeping leaner inventory despite the “availability” of timber.
“Nothing is hard to get right now,” he said. “And our procurement team is doing a very good job of monitoring both the market and needs.”
The Tennessee lumberman, who primarily sells to home builders and commercial contractors, said that unwavering log prices have also complicated the market.
“Log prices have not come down since the pandemic,” he said. “They were blowing-and-going during COVID when that pricing got so high. But log costs weren’t that big of a deal then (when the lumber market was strong).
But now the that the market has come down so much, it is a big deal.”
When trying to predict market trends in 2024, all three sources agreed that it will take time for things to stabilize.
“I think that things will pick up a little at the first of 2024,” said the Louisiana source. “But nothing will go crazy.
We’re hearing the same from our customers.”
The Tennessee source tried to remain positive.
“They are predicting that the interest rates are going to ease back some,” he concluded. “Things will take off some then.”
