Domestic producers answered the bell when the U.S. announced it was placing tariffs on imports of Canadian lumber last March. Lumber mills almost immediately raised prices by 7%, according to Eugene, Ore.-based Random Lengths' composite price index for March. Higher mill prices were quickly passed along to contractors and ENR's 20-city average price for 2x4s jumped 4% in April, after increasing 2% in March.

The price rally broke a long slump but soon began to falter. Weak demand forced mills to roll back prices about 4% in both April and May, wiping out the March increase. ENR's price for the most commonly used species of 2x4s held steady in May before slipping 1% in June. While the June decline was relatively modest, it measures against a 4% increase during the same month last year. As a result, ENR's 20-city average lumber price tumbled 11% below last year's level after climbing to within 4% of 2001's price level in April. The setback in lumber prices was mirrored in the plywood market, where ENR's price was rolled back 2% after a 5% increase.

SPECIAL REPORT: Second Quarterly Cost Report: Steel: Still Struggling with Imports

SPECIAL REPORT: Second Quarterly Cost Report: Equipment: Sales Slump Flattens Prices

SPECIAL REPORT: Second Quarterly Cost Report: Compensation: It is Now a Buyers' Market

SPECIAL REPORT: Second Quarterly Cost Report: Labor: Wage Hikes Gain Momentum