As housing permits and starts fall, there is less demand for building materials used in new home construction. Without significant reductions in building material availability to reduce supply, prices of those materials will fall. There currently seems to be excess supply at every level of the building material chain, from the producers to the end users. 
The lumber chart below illustrates the result of prices falling as demand from new construction falls, while the supply does not decrease. 
Yesterday, there were more lumber contracts traded than there were total just five years ago. This tells us that an usually large number of lumber futures participants are placing bets. There were more participants willing to bet on lower lumber prices than higher lumber prices, which drove the price to a "limit down" state, halting further trades. I think that the large volume, coupled with the fact that it was “limit down” day, indicates that lumber prices will continue to fall. The total number of contacts being traded (bets being placed) is falling as well, indicating that fewer participants have an opinion about whether lumber will go up or down. Falling lumber prices make it more challenging for us, our suppliers and our customers. Buyers at each level who might buy think it is better to wait for even lower prices, less revenue is generated for the unit volume being sold and profits generated from those sales are less.
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