The latest US housing starts and US new home sales data, for June 2022, continued the downward trend seen in May, when mortgage and interest rate increases hit the housing market.
It is true that a slow-down is apparent in both construction and home buying activity, it is important to note that while month-over-month starts and permits may have dropped, new building and permits activity for the first six months of this year were up compared to January to June of 2021.
Total housing starts in the US for June 2022 fell -2% to 1.559 million compared to May, and were down -6.3% from the June 2021 rate of 1.664 million. Data for May was revised higher to a rate of 1.591 million units from the previously reported 1.549 million units. However, total starts year-to-date are up +6% compared to the first six months of 2021.
Meanwhile, building permits were almost flat, down only -0.6% to 1.685 million from the revised May rate of 1.695 million. This is +1.4% above the May 2021 rate of 1.661 million. During the first six months of the year there was a +3% increase in building permits 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 yet again, this time by +1.1% to 285,000 units. The single-family housing backlog dropped slightly, to 147,000 units.
Combined, there are a record 1.680 million units under construction, 824,000 of them 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, dropped -8.1% to a rate of 982,000 units. Single-family authorizations were at a rate of 967,000 units, which is -8% below the revised May figure of 1.051 million 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.
Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Monthly Averages
Looking at lumber prices, bumping further upward slightly, for the week ending July 22, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$684 mfbm, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter. This is up by +$20, or +3% from the previous week when it was $664, and is up by +$59, or +25%, from one month ago when it was $625.
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* Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS
The U.S. Census Bureau and the US Department of Housing and Urban Development released July 26 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.
Continuing drops seen for most of this year, sales of new US single-family homes fell again in June. There were 590,000 new single-family homes sold last month, which is down -8.1% from the revised May rate of 642,000 and is -17.4% below June 2021 when it was 714,000.
At the sales pace in June it would take a comparatively high 9.3 months to clear the supply of houses on the market.
There were 457,000 new homes on the market in June, which is up +2.2% from 447,000 in May, and is up a whopping +24.3% from 346,000 in June 2021. Houses under construction made up 67% of the inventory, with homes yet to be built accounting for about 24%.
Benchmark Softwood Lumber Prices July & US NEW Home Sales June: 2022
The median sales price fell by -9.5% to US$402,400, from US$444,500 in May. The June price is up +6.9% from one year ago, when it was $374,700. It is important to note that US new home prices rose sharply through all of 2021 and most of this year to date.
Compared to the same week last year, when it was US$500 mfbm, the price of Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) for the week ending July 22, 2022 was up by +$184, or +37%, said Madison’s Lumber Reporter. Compared to two years ago when it was $590, that week’s price is up by +$94, or +16%.
Benchmark Dimension Softwood Lumber Prices Western S-P-F 2×4: July 2022
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