This is correct answer. FWIW, lumber prices bounce around a bit anyway, it's just generally smoothed out by the big box stores, via various contracts and the like. I know even after lumber had gone through the roof Menards was still selling it at regular prices. I'd expect a similar lag time on the way down, assuming it ever goes down.I can tell you that nobody knows.
lumber-futures-2021-03-14-macrotrends.png
This is a 5 year chart, and you'll notice we've had some spikes, most notably in 2018. It also seems like it spikes whenever there's a large natural disaster, like a hurricane.
This is the other element. A wise man once said that if you can predict inflation, you'd be wealthy beyond the dreams of Midas. Right now there are a few competing forces which are determining if we're going to get inflation, deflation, or something in between.People ask how can 1400 dollars or 2000 dollars in someone's hands create inflation ? The reality is the recipients are only possessing that money for a very short time. After they get it, who gets it next ? Who gets it after that?
The big questions are:
1) is this enough to fill the hole in the economy caused by the lockdowns?
2) what will happen with this money once it's in people's hands? If you spend it, and so does the next person and the next person the velocity of money increases, making more money in the system, causing inflation. If people just gamble it away, or put it into a mattress the velocity of money drops, and there is deflation. For the past 10 years the velocity has been decreasing, and it fell off a cliff during the pandemic. Survey's have also indicated that people are paying down debt, and gambling on the stock market, both of which are not inflationary.
In this particular market, it's also a question of what the housing market will do. Having a rising housing market in the midst of a recession is a little nuts. Having one with so little supply even more so. However, there are also record numbers of people unemployed, with a record number of mortgages in forebearance, which might move into foreclosure when the music stops. Massive numbers of homes in foreclosure will fix the supply issues, in addition to being massively deflationary.
So, once again, nobody knows what's going to happen. I'd guess that it's likely prices will be elevated for some time, and the longer they stay up, the more likely they are to stay that way.