Housing data showing a rebound in new construction last month helped boost lumber prices.
The Commerce Department said that housing starts increased in August to 1.575 million units. The analysts expected a rate of more than one million. The July data was revised down to 888-492-0.
New permits for home construction fell 10% last month.
The price of lumber was $512 per thousand board foot on Tuesday. The key commodity moved above and below $500 for most of the month due to a number of factors. Mortgage rates went up last week for the first time in six years.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the falling permit data still has much further to go.
"You can expect media attention to focus on the 12.2% jump in housing starts, and more or less ignore the 10.0% plunge in permits," he wrote. When starts and permits move in opposite directions, it's a good idea to trust the permits numbers, which are less noisy.
lumber prices have lost more than 50% of their value so far this year and are well off their all-time high of $1,700 per thousand board feet.
As the housing market slows and the Federal Reserve continues to hike rates, the key building material is under pressure. The Fed is expected to raise benchmark interest rates by another 75 basis points this week.
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