Lumber futures jumped to an eight-year high, as signs of a pickup in Chinese buying added to optimism about the U.S. housing recovery that has fueled a three-month boom in the building material.

Prices of lumber for January delivery on the Chicago Mercantile Exchange reached $392.80 per 1,000 board feet Thursday, their highest trading level since April 2005. Prices have climbed nearly 40% since late September.

The surge has been driven by several factors including bullish signs for U.S. housing and timely exports to China. The additional export sales—mainly by Canadian mills—occurred at times when the lumber market appeared to be stalling. The extra sales allowed the mills to seek higher prices.

The latest price jump, which began in mid-November, sent the January contract up 22% over just five weeks. Home-sales data released in that period showed improving demand. The Commerce Department reported new-home sales for November rose 4.4% from October to the highest level in more than two years. Sales of previously owned homes have grown sharply, too, reaching a three-year high in the latest month.

From The Wall Street Journal: http://online.wsj.com/article/SB10001424127887324274404578211514007860952.html