New house sales in the US jumped by 11 per cent in June – why is lumber price so weak then?
Marla Guthrie
Jul. 27, 2009

Home prices and lumber future price correlate very nicely in a typical real estate recovery. While the house prices have stabilized and then recovered somewhat the lumber price is historically low giving rise to suspicion that the housing recovery is not real.

New house sales in the US jumped by 11 per cent in June. The monthly rise was the sharpest in nearly ten years, far exceeding economists’ expectations, and followed a revised increase of 2.5 per cent in the previous month. House sales rose to an adjusted annual rate of 384,000, the department of commerce said.

But lumber price went nowhere. That is scary according to some real estate analysts. The last time that happened was during early nineties when the real estate finally bottomed after four more years. The price divergence between new home prices and the lumber price shows the fact that demand is artificially created by unrealistic price reductions. That is not sustainable on the long term.

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New house sales in the US jumped by 11 per cent in June – why is lumber price so weak then?
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The price divergence between new home prices and the lumber price shows the fact that demand is artificially created by unrealistic price reductions. That is not sustainable on the long term.
READ MORE>>

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