The Housing Unrecovery Is Here: Lumber Enters Bear Market

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...

 

We wonder when the broad equity market will wake up to that?

 

not like we haven't seen this hysteria before... (can this really go on for another year before reality hits?)

 

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