SWEET HOME n Lumber prices are down as much as 35 percent from a year ago, when wholesalers and mills were concerned about the aftermatch of Hurricanes Katrina and Rita in the Gulf Coast.

"I think we're near 4-year lows," said Jim Philpott, co-owner of Lester Sales Building Materials, in Sweet Home.

In October 2005, a little more than one month after Hurricane Katrina devastated New Orleans, Philpott said that although he was assured of a steady lumber supply due to a long-term relationship with his wholesaler, lumber prices added $2,500 to each of three home jobs he was bidding out.

Jim Geisinger, executive vice president of Associated Oregon Loggers based in Salem, said he recently spent time at a meeting in Colorado where lumber prices were the center of conversation.

"There's some speculation among guys in the timber business that we may see a recession in the timber industry similar to that of the 1980s. Only back then, interest rates had risen to 17 or 18 percent," Geisinger said. "The housing market has been strong for three years in a row. Now, interest rates that had been less than 5 percent, are edging up to 6.5 percent or more."

Geisinger said that historically, home building has helped move the country out of economic recessions.

"I think there are a lot of people bracing for some not so good markets," Geisinger said.

Nathan Towlerton, a salesman at Keith Brown Building Materials in Corvallis, said he couldn't believe how quickly strandboard panels shot up in price following the hurricanes.

Towlerton, who has worked in lumber sales in Oregon and Montana for 10 years, said he remembers when just a few years ago, the 4' X 8' sheets of strandboard sold for as little as $4. After Katrina, they shot up to more than $20. They are now selling for about $8.

"That's more where it should be," Towlerton said, but overall, lumber prices are spiraling downward. "Everything has dropped drastically. We're in the last month of an eight-month low."

Towlerton said 1/2 inch plywood climbed to as much as $27 per sheet last year. It's about $15 now.

"A year ago, everything was going to the Gulf Coast," Towlerton said. "We weren't running out, there was just much more scrambling needed at times. There's no question, it was the biggest price increase I'd seen."

There are 12 Keith Brown lumber centers in Oregon and California, Towlerton said. "We provide materials for everything from the foundation to the finish work," Towlerton said. "Some people are complaining that with the low market prices, they're not making as much money as when things were more expensive."

Towlerton said that construction remains steady in Benton County. "Even though we have competition from Home Depot and Spaeth's, there's still business to be had. Builders often spread their business among a number of suppliers."

Anthony Monaco, manager of Spaeth Lumber, said the national drop in new home sales is definitely affecting lumber prices across the board.

"Now would be a good time for someone with a lot of money to purchase lumber and store it in a warehouse until next summer," Monaco said, anticipating an upturn in prices by then.

Spaeth Lumber had a "great summer" business wise, Monaco said. "We're probably on a bit of a slowing trend as we enter the fall and winter months," Monaco said.

Monaco said the margin of profit in most lumber products is slim, even in good times. Spaeth's employs 22 people.

"If the Fed keeps raising interest rates, it could keep pushing new home sales lower," Monaco said.

Random Lengths monitors the lumber industry and publishes a weekly newsletter. It also tracks a composite of lumber prices based on 1,000 square feet of material. A year ago, that composite was $467. Today it is $304. Spot prices that were as much as $455 a year ago, are now as low as $288.

Recovery in the Gulf Coast is progressing, but not as rapidly as some had anticipated, therefore pressure on lumber supplies was eased a bit. That was combined with the fact that new home sales nationwide fell in August, from a year-to-year standpoint, for the first time in 11 years.

Nationally, home supplies are growing faster than demand. In some areas of the country, median home prices are down as much as 10 percent from April, when prices reached record levels.

Another key factor in the decline is that investors purchased large numbers of homes with the intent of "flipping" them, holding them long enough to make a profit and then reselling them. Many of those investors have now placed those homes on the market, creating somewhat of a glut in some areas of the country.

Alex Paul can be reached at alex.paul@lee.net or 812-6076.