Lumber futures jumped to the highest in seven years after U.S. home prices climbed more than forecast in October, adding to signs of stabilization for the housing market.
The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from October 2011, the biggest 12-month advance since May 2010, the group said today. The median forecast of 30 economists in a Bloomberg survey projected a 4 percent gain. The average rate of housing starts from September through November was the strongest since the three months ended August 2008, the Commerce Department said last week.
“Housing starts are up fairly dramatically, and the economy is picking up steam,” Neil E. Harl, an economist at Iowa State University, said in an e-mail. “There is a bit of pent-up demand involved. Many lumber yards had undoubtedly let their inventories drop with the downturn.”
Lumber futures for March delivery gained 3.8 percent to $399 per 1,000 board feet at 1:39 p.m. on the Chicago Mercantile Exchange after touching $399.50, the highest since April 2005.
The CME increased the daily-trading limit to $15 after the price gained by the maximum of $10 in the previous two sessions.
Residential homebuilding has contributed 0.3 percentage point to gross domestic product on average in the first three quarters of 2012, according to Commerce Department data. The last time it added to growth for an entire year was in 2005, when it boosted the economy by 0.36 point.
A typical U.S. home uses about 16,000 board feet of lumber.