The drop in lumber prices from their record high will serve as a tailwind for Fort Washington-based Toll Brothers in the face of other cost pressures, writes Matthew J. Belvedere for CNBC.
“Lumber is down $40,000 a home,” said Doug Yearley, CEO of the luxury home builder. “We’re going to see the benefit of that in the second half of ’22.”
Lumber prices reached previously unmatched highs in May when a thousand board feet cost $1,700. This was an explosive surge compared to a pandemic low of $300 less than a year prior.
Currently, lumber has now settled at around $500.
“We knew it would come back,” said Yearley. “We’ve been very happy with how quickly it’s come back. I think it’s going to stay down.”
The drop in lumber prices will further improve the bottom line for the developer that recently reported better than expected earnings for its fiscal third quarter.
“It’s going to help us,” he said. “It’s going to drive some margin. But I think it’s going to offset some of the other cost increases that we’re feeling.”
So far this year, Toll Brothers stock is up more than 46 percent.
Read more about Toll Brothers and lumber prices at CNBC.
