Lumber futures slid to the cheapest since September as rising interest rates put a damper on the housing market.

Lumber futures fell as low as US$568.40 per 1,000 board feet in Chicago on Wednesday, extending a slump to about 50 per cent this year. Higher interest rates and soaring home prices are starting to put the brakes on home sales, according to Bloomberg Intelligence.

“The drag is things like inflation and mortgage rates are way up now,” said Russ Taylor, president of Russ Taylor Global in Vancouver. “That’s going to affect the new entry homeowner and it’s causing people to have second thoughts.”

The commodity’s collapse is a stark reversal from all-time highs set in 2021 during a pandemic-fueled homebuilding boom. U.S. home prices are up 42 per cent since the start of the pandemic, which coupled with a rate hike is making housing unaffordable, according to mortgage data firm Black Knight Inc.