As supply-chain disruptions increased costs, new U.S. home construction slowed down in October, driven by a drop in single-family projects.
For October 2021, total residential starts in the US remained essentially flat from the previous month, at 1.520 million units.
Continuing to improve as throughout this year, permits for future homebuilding in October were up by +4% compared to the previous month, when it was 1.586 million, to a rate of 1.650 million units. This is a +3.4% increase over October 2020, when it was 1.041 million units.
There were about 333,000 job openings in the construction industry as of the end of September, and according to the NAHB, availability of land for building is at multi-decade lows. As well, construction costs jumped a record +12.3% year-on-year in October, according to the latest producer price data.
October starts of single-family housing, the largest share of the market and construction method which uses the most wood, was 1.039 million annualized, an almost -4% drop compared to September, when it was 1.081 million. Single-family permits, however, rose by +2.7% above September, to 1.069 million units from 1.041 million units.
Over the first 10 months of 2021 there were permits issued for 1.439 million residential units, an increase of +20% from 1.199 million at the same point in 2020. Single-family permits, meanwhile, improved +17.3 percent year-over-year to 949,400 units.
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.
Benchmark Softwood Lumber Commodity Western Spruce-Pine-Fir Price: October 2021
Looking at lumber prices, cresting just above levels for the same week last year, for the week ending November 12, 2021 the price of Western S-P-F 2×4 #2&Btr KD (RL) remained flat compared to the previous week, at US$620 mfbm. That week’s price is up by +$11, or +2%, from one month ago when it was $609.
The Census housing report also showed the number of homes under construction but not yet completed rose to 1.45 million, the highest since 1974. The number of houses that remain under construction exceeded the number of those completed for the fifth straight month and by the most on record as delays persist.
Starts have declined from the 1.725 million unit-pace scaled in March, which was more than a 14-1/2-year high. Still, home building remains underpinned by a severe shortage of previously owned homes on the market, which has resulted in record house price increases.
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.
* Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS
US Housing 1-Unit Starts & Permits October and Benchmark Softwood Lumber Prices November: 2021
When compared to the same week last year, when it was US$590 mfbm, for the week ending November 12, 2021 the price of Western S-P-F 2×4 #2&Btr KD (RL) was up by +$30, or +5%.
Compared to two years’ ago when it was $396, that week’s price was up by +$224, or +57%.
Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Historical Perspective
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