VANCOUVER, BC, Sept. 30, 2022 /CNW/ - US housing starts and US new home sales for August 2022 sharply reversed the downward trend seen in the past few months since mortgage and interest rate increases hit the housing market. While it is true that a slow-down is apparent in both construction and home buying activity, it is important to note that month-over-month starts have indeed dropped, however new building activity is flat compared to one year ago.
Total housing starts in the US for August 2022 jumped +12.2% to 1.575 million compared to July, and were down -0.1% from the August 2021 rate of 1.404 million. Data for July was revised lower, from the previously reported 1.446 million units. Indeed, total starts year-to-date are down only-1.4% compared to the first eight months of 2021.
Meanwhile, building permits dropped significantly – which is normal for this time of year – down -10% to 1.517 million from the revised July rate of 1.685 million. This is -14.4% below the August 2021 rate of 1.772 million. Data for July was revised quite a bit higher, from the previously reported 1.655 million units. During the first eight months of this year there was a -4% decrease in building permits from the same period in 2021.
It is interesting to note that total permits in June 2022 were 1.572 million, almost exactly the same as starts for August. This indicates a good momentum for ongoing construction activity. That permits are down for August is not alarming since it is the normal time of year, seasonally, for building to start slowing down.
Combined, there was a very high 1.702 million units under construction, 812,000 of those single-family homes. This is well above the historical record-high of 1.628 million units that were under construction in 1973. These will eventually become starts and help to underpin residential construction.
June starts of single-family housing, the largest share of the market and construction method which uses the most wood, recovered from recent drops, up +3.4% to a rate of 935,000 units. Single-family authorizations were at a rate of 899,,000 units, which is -3.5% below the upwardly revised July figure of 932,000 units. Building permits are generally submitted two months before the home building is begun, so this data is as indicator of August construction activity.
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.
Looking at lumber prices, staying flat from the previous week, for the week ending September 23, 2022 the price of benchmark softwood lumber item Western S-P-F 2x4 #2&Btr KD (RL) was US$520 mfbm, said weekly forest products industry price guide newsletter Madison's Lumber Reporter. This is up by $0, or 0% from the previous week when it was $520, and is down by -$83, or -14%, from one month ago when it was $603.
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The U.S. Census Bureau and the US Department of Housing and Urban Development released September 27 new home sales and house price data. New home sales comprise 10% of real estate activity and are considered a leading housing market indicator as they are recorded when contracts are signed.
Showing a striking reversal to recent months, sales of new US single-family homes jumped significantly in August. There were 685,000 new single-family homes sold last month, which is up +28.8% from the sharply upward revised July rate of 532,,000 and is flat compared to August 2021 when it was 686,000.
None of the houses sold last month were below US$200,000.
At the sales pace in August it would take 8.1 months to clear the supply of houses on the market.
There were 461,000 new homes on the market at the end of last month, up from 459,000 units in July. Houses under construction made up 66.4% of the inventory, with homes yet to be built accounting for 23%.
Completed houses accounted for 10.6% of the inventory, well below a long-term average of 27%. At August's sales pace it would take 8.1 months to clear the supply of houses on the market, down from 10.4 months in July.
The median sales price dropped for the first time in many months, down by just -0.6% to US$436,800, from US$439,000 in July. The August price is down -7.4% from one year ago, when it was $404,300. It is important to note that US new home prices rose sharply through all of 2021and most of this year to date.
As for those lumber prices, compared to the same week last year, when it was US$510 mfbm, the price of Western Spruce-Pine-Fir 2x4 #2&Btr KD (RL) for the week ending September 23, 2022 was up by +$10, or +2%. Compared to two years ago when it was $960, that week's price is down by -$440, or -46%.
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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.
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SOURCE Madison's Lumber Reporter
Keta Kosman, Publisher, Madison's Lumber Reporter, est. 1952, Vancouver, BC, Canada, www.madisonsreport.com, 604 319-2266
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