What lumber can tell us about the economy right now.

Lumber prices soared over the past year, frustrating would-be pandemic do-it-yourselfers, jacking up the costs of new homes and serving as a compelling talking point in the debate over whether government stimulus efforts risked the return of 1970s-style inflation.

The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to new heights, peaking at more than $1,600 per thousand board feet in early May, The New York Times’s Matt Phillips reports.

But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down. Lumber prices in the futures market, for example, are down more than 45 percent from their peak, slipping below $1,000 for the first time in months. That’s still high — from 2009 to 2019, prices averaged less than $400 per thousand board feet — but the sell-off has been gaining momentum over the last few weeks.

It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price jumps for a range of products like airline tickets and used cars will abate as the economy gets back to normal.

Why have prices fallen so fast? It’s partly because they set off a surge of production at the country’s roughly 3,000 sawmills.

Mostly concentrated in the rich belt of Southern yellow pine that stretches from the woods of East Texas to the Carolinas, mills buzzed back to life in a rush to sell wood for prices few would have imagined possible a couple of years ago.

“Nobody’s not running capacity right now,” said Joe Hankins, sales manager at Hankins Lumber, a sawmill and timber company in the north-central Mississippi town of Grenada.

The professional homebuilding industry, the largest source of demand for lumber, is also decelerating from a breakneck pace, with some builders citing high prices for wood as a reason to hold off on construction.

Those decisions by consumers and companies are a major reason some analysts think the recent rise in inflation is the result of temporary mismatches in supply and demand, rather than a harbinger of runaway price increases stoked by all the money pouring into the economy.

The lumber market’s behavior is a sign of consumer sanity, said Kristina Hooper, chief global market strategist at the investment management firm Invesco.

“We don’t have that kind of buying frenzy that creates sustained inflation,” she said.