The announcement that Random Length Lumber Futures (for March 2021) have reached an all-time high ($1,004) has prompted a variety of solutions by contractors and other customers of building supply dealers. The record high lumber prices soared past the $1,000 per 1,000 board feet mark on Feb. 18, sending buyers into reaction mode. This figure is over twice the amount ($495.60) from Nov. 2020.
Experts say a strong home building market, low interest rates, and a boom in home remodeling are responsible for the increase despite other indications that demand for lumber is decreasing.
This dichotomy is most evident in the demand for new, affordable housing. On one hand, builders were already challenged to meet demand, and the lumber increases have only made it that more difficult. On the other hand, new home construction start-ups dropped 12% in January from the previous month according to the U.S. Census bureau.
The related bellwethers of permitted homes and publicly owned home building companies also show less demand for lumber. The number of single-family dwellings “permitted, but not started” increased 9.6% in December 2020 while some publicly owned companies have throttled back construction over the short term with the hope of lower lumber prices in the near future.
To complicate matters further, saw mills have increased production to meet demand and capitalized on the record high lumber prices, but increased supply usually results in lower prices.
What does this mean to stakeholders, including building supply dealers?
The ebb and flow of lumber prices will eventually find equilibrium, but building supply dealers should always stand ready to move their wares by offering creative buying solutions.
Traditional solutions include charge accounts for local contractors as well as cash, check or card.
UPDATE: a CNBC article published April 30, 2021 states that the "soaring lumber prices add $36k to the cost of a new home!
The CrossCheck Solution to Record High Lumber Prices
In the late 1990s, CrossCheck launched a special service for merchants such as building supply dealers who sell big-ticket items. The program is called Multiple Check and doesn’t require buyers to have good credit or even complete credit applications. In fact, building supply dealers only need to share the simplicity of Multiple Check with their customers before accepting a series of checks for a single purchase.
How does Multiple Check work?
Multiple Check simplifies the process of selling and buying building supplies.
Using Multiple Check, buyers write 2 – 4 checks all with the same purchase date. Dealers deposit the checks on dates selected by buyers over a specific term (usually 30 days).
The entire process can be even simpler for building supply dealers who bundle Multiple Check with electronic check processing services such as Remote Deposit Capture. In these instances, merchants run each check through a scanner provided by CrossCheck via its no-fee loaner equipment program. Those checks are sent to CrossCheck through its online portal or Focus (a free desktop app), and building supply dealers need only wait for each deposit to receive guaranteed funding.
Record high lumber prices are not a problem for building supply dealers who use Multiple Check.
Request a Free Consultation to learn how Multiple Check can turn lumber transactions into slam-dunk sales for building supply dealers.