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In our recent housing outlook we mentioned the potential for weakness in lumber prices going forward as the housing stimulus ends and seasonality begins to turn bearish in the housing market. Lumber prices are 18% off their recent highs and still overbought after the sharp run-up on the back of the housing tax credit extension.

Like clockwork, however, prices have started to fall into and after the April 30th end of the tax credit. We’ve seen some signs of a potential continuing decline in the Shiller housing data. Are lumber prices leading the next leg down or is this just a dip in a continuing bull market?

lumber IS LUMBER FORECASTING THE NEXT LEG DOWN IN HOUSING?

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Source: Is Lumber Forecasting the Next Leg Down in Housing?