Lumber futures dropped as low as $568.40 per 1,000 board feet in Chicago on Wednesday, the cheapest since September, and a drop of about 50% so far this year. Rising interest rates combined with soaring house prices are slowing the housing market, and this is impacting construction.

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

The collapse comes after lumber hit all time highs in 2021 during the pandemic-fueled home-building boom. Since then, US home prices are up 42%. Combined with the Federal Reserve’s rate hikes making mortgages more expensive, many prospective home buyers are simply finding homes unaffordable, according to mortgage data firm Black Knight Inc.

Eyes will now turn to retailers like Home Depot and Lowes, whose stock prices are heavily dependent on an active housing market and prodigious new construction to fuel their sales. If demand for lumber has dropped, the construction may be waning, and sales at these big retailers will suffer as a result.