Category: Housing

The focus on trade last week was the final liquidation in July, which initially pushed July prices sharply lower and dragged September down with it. By Friday, September had clawed its way back to nearly even on the week. We did hear reports of numerous cracks in some items in the cash market. As of Thursday, we viewed the September break as primarily July-related. By Friday, that view became less certain, and now there is growing concern that a cash adjustment period may be developing. The market should give us that answer early this week.

Heads up: Over roughly the last 10 sessions, there have been consistent iceberg buy orders showing up at various levels in the September contract. Given that the market was in a liquidation period, it initially looked like position exits. However, last week’s Commitment of Traders data suggests it was a combination of short covering and new long accumulation by funds. Typically, their approach is to buy strength to establish long exposure, but in this case they appear to be building a position on weakness.

That raises an important question—why would funds be accumulating a long position under the current economic backdrop? Not sure but I do know if the market is going to rebuild toward 10,000 open interest, it will require meaningful participation from the funds. Whether this activity is the early stages of that shift is something worth watching closely.

The technical read is very straightforward—an if/then setup. The 200-day moving average sits at 639.10, and September came close to that level on Friday. The market has now traded above the 200-day four separate times but has yet to close above it. If the market settles above 639.00, expect a meaningful short-covering spike in the following session. If funds add to long positions at those levels, it signals a shift in the broader trade dynamic.

On the downside, support comes in at 622.50. A break below that level should invite additional selling pressure. The likely catalyst for that move would be increasingly negative cash market reports.

Finally: The market quietly made a new weekly high last week, with 638.50 marking the highest level since August 2025. Both the futures and cash markets remain in a positive cycle that began in October 2025. The question today is not whether the cycle has turned negative, but whether we have entered a corrective phase—and if so, how deep that correction could be, if at all.

Daily Bulletin:

Summary:

Steady outtake, steady demand, steady prices—that’s a recipe for a dull trade with thin margins.

Seasonally, May into early June is dead money. “Sell in May and go away” exists for a reason. But this year, the takeaway is just firm enough to keep everyone from stepping away entirely. Add in historically lower field inventories (possibly by design), and the market doesn’t have the cushion to relax.

Right now, the industry is playing prevent defense—always on the field, focused on not losing. That’s a tough way to operate in a commodity business, especially when costs are sticky and conviction is low.

Flip Side:

I think what most are missing is that there are inventory pockets—and they’re full. It’s not enough to supply the whole market, but it’s a real risk for the guys sitting on it. And right now, there’s no appetite to hedge any of it.

In a market with no clear direction, that’s a problem. Everyone needs to stay disciplined—we’ve seen how quickly this can turn into a bottomless pit over the past year. It doesn’t take much. Hedge 20–30%, give yourself some cover, and live with it.

Step back and nothing has really changed in three years. The guys who bought wood and consistently hedged made money on the futures side—that’s just fact.

I think the weakness is running out of gas… but I’ve said that before.

Starting back in June of 2023.

Technical:

Last week’s trade was a step back technically. It’s not a sell signal, but it did give back some hard-earned momentum. Most oscillators have rolled back to neutral-to-negative, and it’s going to take some work to turn those higher again. The fact one stayed positive since mid-April just reinforces how sideways this market really is.

Levels to watch:
July futures need a close over 603.50—the recent spike high—to confirm things are tightening underneath the surface.

On the downside, there’s real air between 580 and 560. That zone keeps catching volume month after month, with a few thousand contracts likely changing hands there since January. It’s become a magnet.

Markets tend to build a base in areas like that… and eventually move higher from them.

Recap:

The futures trade was dominated by the roll last week. That said, it made a new contract low and then rallied. We saw that pattern a week earlier—and frankly, we’ve seen some version of it for nearly two years now. Rallies continue to lack momentum, fail quickly, and ultimately find themselves testing new lows.

A technician put it best last week: these trends are neither bullish nor bearish—they’re bullshit. There’s no trend, no follow‑through, and no conviction.

The broader economic backdrop for housing remains decisively neutral, and neutral markets have a nasty habit of killing their own rallies without outside help. That’s exactly where we sit today.

So, let’s look at a few housing headlines for more color.

Housing Headlines 

• Existing home sales remain sluggish.
March existing‑home sales fell 3.6% month‑over‑month to an annualized pace just under 4.0 million units, the weakest March pace since 2009. Sales declined in all four regions, underscoring just how little organic momentum exists in the market. [markets.bu…nsider.com]

Existing home sales are projected to stay in line with 23-24 and 25. Without a rate cut expect slow sales and low inventories.

 The macro effect:

“This has caused multifamily executives to lower their expectations for total 2026 multifamily sales volume and starts.”

• First‑time buyers are effectively sidelined.
First‑time buyers accounted for only 21% of transactions, a record low and well under the historical norm near 40%. The market is increasingly split between equity‑rich owners and would‑be entrants who simply can’t make the math work. [crosscount…rtgage.com] Can’t make it work…. nice.

From NAR, first time home buyers fell to a record low. They made up only 21%. That group was always in the high 30 percentile.

• Inventory is improving—but not enough to matter .
Active listings are rising year over year, and months’ supply has crept above four months, technically closer to “balanced.” But inventory is still well below pre‑pandemic norms, offering just enough supply to cap prices—not enough to stimulate volume. [mortgagetech.ice.com]

• Prices refuse to break—only flatten.
Despite weaker sales, median prices continue to grind higher on a year‑over‑year basis, driven by limited supply and locked‑in owners. Zillow expects roughly flat price appreciation in 2026, reinforcing the idea of a capped, sideways market rather than a corrective one. [zillow.com]

Builders I work with are staying on course and keeping production at the planned 2026 amount. “Head down and grind ahead” seemed to be the common theme.

• Mortgage rates remain a headwind, not a catalyst.
Rates dipped briefly below 6% earlier this year, but volatility tied to macro uncertainty pushed them back toward the mid‑6% range. That swing was enough to choke off affordability gains but not enough to force capitulation selling. [cnbc.com]

To sum it up:

There’s nothing here that argues for sustained upside—and nothing ugly enough to force a structural reset. Housing is stuck in neutral, and lumber reflects that reality perfectly. Rallies fail because they’re supposed to. Weakness finds buyers because costs, supply, and discounts still matter.

Until affordability actually improves or demand meaningfully breaks—this remains a market that chops itself to death, one failed rally at a time. It bothers me every time we use the affordability excuse. The is more fundamental issues involved.

Technical:

The May contract has found support in the $570 area. The fact that there are EFP’s available this time has brought the buyers back to the futures market at a price. This hand to mouth environment tends to magnify deals. Today it is in futures.

The starts projection is for 1.38. Permits are 1.39.

The weekly wedge pattern keeps getting tighter. The breakout looks to be a few weeks from now. May expiration could be interesting.