Lumber prices broke a three-week losing streak and edged higher on Friday, extending its three-day rally to as much as 10% at $506 per thousand board feet.

The gains come despite continued headwinds in the housing market, particularly a surge in mortgage rates. to their highest levels in over a decade.

The average 30-year fixed mortgage rate surged to 5.89% this week, according to data from Freddie Mac. The surge to nearly 6% represents the highest level since 2008, in the midst of the housing market collapse.

And those higher mortgage rates are leading to lower demand in the housing market, according to home builders across the country, which ultimately translates into lower demand for lumber.

“If interest rates get to 6.5% the waters will get very choppy,” a Tampa home builder told John Burns Real Estate Consulting in its August survey. Another builder in Harrisburg said it saw a big uptick in buying activity when mortgage rates briefly dipped in early August to 5%, signaling how strongly correlated mortgage rates are to home sales.

businessinsider