The Domino effect of the Fed’s aggressive interest rate hikes to control record-high inflation has resulted in a pullback in demand for housing due to rising mortgage rates. The average 30-year fixed mortgage rate inched closer to 7%, a steep climb considering that the average rate was just 3% a year ago.
As a result of borrowing becoming more expensive for individuals, demand for housing and building materials such as lumber is declining. From the highs of $1,477.4 per thousand board feet (mbf) at the beginning of March 2021, when the economies were simultaneously recovering from the Covid-19 pandemic and suffering from supply chain disruptions, the price of lumber has fallen 70.5% to $435.60 per thousand mbf.
