Lumber's Decline Likely Means Predictions of Housing Bottom Were Premature

Includes: CUT, IYR, WOOD
by: Marc Liu

Lots of the smarter financial commentators were on tap several months ago to state that a move up in lumber would presage a bottoming in the housing market.

So around the end of April when lumber bottomed at $150 and began moving up all looked good. And as the price moved up to $190 on April 13, it looked like the bottom for housing was in.

But then lumber began to fall, and as of Wednesday hit $160. Given the downward momentum it appears that it won't take too much to get it back down to the $150 level.

This round turn in the lumber prices probably tells us that the predictions of a bottom in the housing market were premature.

I wonder if the false rally in lumber also could tell us something about the current rally in the stock market.