Even if lumber prices normalize around $500, that's still well above the pre-pandemic average.
"We're out of the panic buying. We're out of the massive industry shortages. We're out of the extremes," said Mace McCain of Frost Investment Advisors.
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.
Weyerhaeuser could issue a special dividend of $2 per share by the first quarter of 2022, the note said.
"A better-than-expected demand outlook would prompt an inventory rebuild and could spark a large move in pricing," BofA said.
Lumber futures have jumped in recent days on mounting concerns that wildfires in Canada and the Western US will snarl production and supply chains.
As the price of lumber stabilizes, more volatility lies ahead, and three factors will keep the red-hot commodity in high demand.
Lumber prices will be volatile, but movements will vary by location in the US, according to Stuart Katz, CIO at Robert Stephens.
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.
The price of lumber soared in the first few months of the year but has tumbled since May as demand falls and suppliers up production.
Commercial construction may be fueling demand this time around as the US economy makes its way to a full recovery, an analyst said.
Experts told Insider that the price of lumber could go down to $600 per thousand board feet in the next six months.
"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.
Stinson Dean expects lumber to trade above $1000 for potentially the next three to five years. The historical average is around $400, he said.
Lumber prices have fallen more than 43% since May's record high. The Fed chair said used car prices may follow suit.
Lumber prices have dropped sharply in recent days, but the signs are pointing to further falls, one strategist said.