Lumber futures have climbed to their highest level since 2005 and they have gained around 9% this year, with most of that gain seen just this month as the outlook for U.S. housing improves.

“Lumber, like other raw commodity goods, is a good indication of economic conditions,” said John Person, president of “With a new high trade today, it clearly shows demand is present.”

Lumber for May delivery climbed $7.50, or 1.9%, to trade at $407.40 per 1,000 board feet ahead of the settlement on the Chicago Mercantile Exchange Wednesday afternoon.

Prices haven’t settled above $400 since March 2005, according to data from FactSet, though the market’s volume is usually small. On Wednesday, volume was at around 750 contracts.

“While new construction is picking up, the demand is picking up on remodeling and rehabbing in the Northeast as insurance claims are paying out from Hurricane Sandy,” said Person. “This is an area of demand that is suspected as boosting prices in recent sessions.”

From The Market Watch Blog: