VANCOUVER, BC, June 17, 2022 /CNW/ - After dropping quite a bit in recent weeks, many softwood lumber prices leveled off in mid-June as a modicum of supply-demand balance seemed to have been reached. Over the past two years as the lumber market reacted to big changes in external conditions, there was never-before-seen high price levels and volatility. It looks like the remarkable highs and attendant corrections down might be getting worked out, as these swings are less extreme each time.
This is the usual time of year for construction framing dimension softwood lumber prices to be dropping, as most large-volume builders have received the wood they need for housing projects planned. At the moment the delivery delays which have plagued the forest industry for more than six months seem to be working out; customers are receiving their orders in a more normal time frame.
* Madison's Lumber Prices, weekly, are a good forecast indicator of US home builder's current lumber buying activity ——> DETAILS
While month-over-month starts and permits are down in May compared to April, building and permits activity for the first five months of this year are up compared to January to May of 2021.
Total housing starts in the US for May 2022 fell -14.4% to 1.549 million compared to April, but are only -3.5% below the May 2021 rate of 1.605 million. Data for April was revised higher to a rate of 1.810 million units from the previously reported 1.724 million units. Total starts year-to-date are up +8.2% compared to the first five months of 2021.
Meanwhile, building permits fell by -7% to 1.695 million from the revised April rate of 1.823 million. This is +0.2% above the May 2021 rate of 1.691 million. During the first five months of the year 739,300 permits were issued, a +2.7% increase from the same period in 2021.
The backlog of houses approved for construction that are yet to be started continued to break all-time record levels. Indeed, the number of houses approved for construction that are yet to be started increased +0.7% to 283,000 units. The single-family housing backlog was unchanged at 152,000.
Combined, there are a record 1.665 million units under construction, 822,000 of them single-family homes. This above the previous record of 1.628 million units that were under construction in 1973. These will eventually become starts and help to underpin residential construction.
March starts of single-family housing, the largest share of the market and construction method which uses the most wood, tumbled -9.2% to a rate of 1.051 million units in May. Building permits are generally submitted two months before the home building is begun, so this data is an indicator of July construction activity. After showing big jumps year-over-year for most of the past year, May 2022 single–family authorizations were at a rate of 1.048 million, which is -5.5% below the revised April figure of 1.109 million.
"The <housing> market has now passed an inflection point whereby single-family home building is weakening", said Robert Dietz, chief economist for NAHB. "We expect further declines in the months ahead, which itself is a recession warning for the quarters ahead."
Looking at lumber prices, staying flat from the previous week, for the week ending June 10, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2x4 #2&Btr KD (RL) was again US$660 mfbm, said forest products industry price guide newsletter Madison's Lumber Reporter. This is down by -$285, or -30% from one month ago when it was $945.
Shrewd investors know that construction framing softwood lumber prices are a good leading indicator for US housing activity, including home building and home sales. Don't miss out, get lumber price data updates directly to your desktop every Friday morning.
"Housing construction appears to be undergoing a transition, with the sector caught between sharply rising mortgage rates and declining affordability on the one hand and supply-chain constraints on the other that continue to result in rising backlogs of projects," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
STAY AHEAD of US housing price data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison's Lumber Prices is used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.
When compared to the same week last year, when it was US$1,275 mfbm, for the week ending June 10, 2022 price of Western Spruce-Pine-Fir 2x4 was down by -$615, or -48%. Compared to two years' ago when it was $378, this week's price is up by +$282, or +75%.
To subscribe to Madison's Lumber Reporter, simply fill out an order form here: https://madisonsreport.com/subscribe/
Established in 1952, Madison's Lumber Prices is your premiere source for North American softwood lumber news, prices, industry insight, and industry contacts. The weekly Madison's Lumber Reporter publishes current Canadian and US construction framing dimension lumber and panel wholesaler pricing information 50 weeks a year and access to historical pricing as well.
Madison's offers a variety of products to meet your information needs regarding the North American forest products industry including:
Madison's Lumber Prices: https://madisonsreport.com/products/madisons-reporter/
Madison's Heating Wood Pellet Prices: https://madisonsreport.com/products/madisons-north-american-heating-wood-pellet-price-report/
Madison's British Columbia Coast Log Prices: https://madisonsreport.com/bc-coastal-log-prices/
Madison's Forest Pulse: https://madisonsreport.com/products/forest-pulse/
Madison's Canadian Sawmill Listings: https://madisonsreport.com/products/madisons-directory/
SOURCE Madison's Lumber Reporter
Keta Kosman, Publisher, Madison's Lumber Reporter, est. 1952, Vancouver, BC, Canada, www.madisonsreport.com, 604 319-2266
Share this article