Even if lumber prices normalize around $500, that's still well above the pre-pandemic average.
Ed Egilinsky of Direxion pointed to the tightening labor market, the raging wildfires, and the emerging delta variant as possible factors that will push lumber prices higher.
"The losses we are seeing over recent months could soon enough bring another major buying opportunity for the bulls to come back into dominance," Joshua Mahony of IG said.
"A better-than-expected demand outlook would prompt an inventory rebuild and could spark a large move in pricing," BofA said.
As the price of lumber stabilizes, more volatility lies ahead, and three factors will keep the red-hot commodity in high demand.
By end of August and into September, the price of lumber could settle in a range between $350-$450 per thousand board feet, an analyst told Insider.
"I would not be surprised at all if we see the price continue to trail lower than $600 or below toward the year-end," Mace McCain of Frost Investment Advisors told Insider.