Despite the incessant belief that this must be too-much-new-supply-driven (as opposed to a lack of demand for new home construction), Lumber futures (after hitting limit down once again today) have now officially entered bear-market territory. Front-month lumber prices are down 23% from their highs in mid-March and given the 2-month lead that correlates so well to the market, it seems things are a little ahead of themselves in 'housing recovery' land.
It seems lumber futures are the best proxy for trading the real economy...
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We wonder when the broad equity market will wake up to that?
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not like we haven't seen this hysteria before... (can this really go on for another year before reality hits?)
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Of course, a plunge in lumber prices will not help all those new mills that are apparently coming back on line now...?
Or is simply that Lumber prices reflect a reality no one is quite comfortable with yet?
Charts: Bloomberg