Of most immediate relevance to sawmills is US new home building.

NAHB is forecasting continued growth in housing production this year, led by on- going single-family gains. Total housing starts are expected to grow 2.7 per cent to 1.25 million units. Single-family production should increase 5 per cent to 893,000 units while the multifamily sector is expected to edge 1.6 per cent lower this year to 354,000.

According to NAHB, key takeaways for lumber producers in 2018 include:

• When it comes to new home building activity, 2017 turned out to be the best year for permits, starts, and completions in a decade. The continued climb was led by single-family homes, which was exactly the type of new inventory frustrated homebuyers yearned for last year. Elevated levels of homebuilders’ confidence combined with persistent low inventory should make 2018 a ripe year for single-family construction to grow.

• New construction last year would have been even higher had it not been for a sharp slowdown in multifamily permits and starts. We see the slowdown as a healthy retreat that will continue this year.

While 2017 was the best year for homebuilding in a decade, much of the inventory crunch confronting home- buyers over the past two years is reflective of the dearth of homebuilding since the recession. To put the past year into perspective, permits, starts, and completions relative to the US population was just 64.9%, 58.8%, and 57.9% of the 50-year average. Clearly, new construction would have to pick up substantially this year to make much of a dent in our inventory woes.

A stronger pace of construction would be helpful for an inventory-starved housing market. Previously owned homes sold in November at the fastest pace since before the housing bubble burst in 2006, leaving the market with an ultra-lean 3.4 months’ worth of supply. That’s well below the six months that’s normally considered a sign of a balanced market.

2017 US Construction Starts Trends: Trulia

Elsewhere, like permits, said Trulia January 18, US housing starts also reached a post-recession annual high in 2017. Starts last year were the most in a calendar year since 2007, finishing off with a total of 1,202,100. This pushes starts up to 58.8 per cent of the 50-year average when taking into account the size of the US population.

Much of the increase in starts last year was also due to a sharp increase in single-family homes, which moved from 750,800 in 2016 to 848,300 in 2017, representing a gain of 8.5 per cent. Multifamily starts, on the other hand, fell from 380,700 in 2016 to 342,400 last year, which is a 10 per cent drop. Since starts are tightly tied to permits in the short-run, we also expect these trends to continue into 2018.

US REMODELLING INDEX: 4Q 2017

The US Remodelling Market Index increased three points to 60 in 4Q 2017, according to the NAHB January 9. This quarter marks the second time in the RMI’s history (dating back to 2001) in which the index reached 60.

For 19 consecutive quarters, the RMI has been at or above 50, which indicates that more remodellers report market activity is higher (compared to the prior quarter) than report it is lower. The RMI is an average of two sub-indices, one that measures current market conditions and another that measures future remodelling activity.

The current market conditions sub-index increased four points to 60 in 4Q 2017.

Otherwise regarding remodelling, NAHB predicts that remodelling spending for owner-occupied single-family homes will increase 4.9 per cent in 2018 and another 0.6 per cent in 2019, again at the International Builders’ Show in Orlando. Remodeller confidence has stabilized at a positive level, as remodelling spending topped US$152 billion in 2017.

US Multi-Family Housing Construction: Full Year 2017

Although multifamily housing starts are expected to slightly moderate this year and in 2019, production levels are projected to remain stable in a range considered normal, according to experts participating in a press conference today during the International Builders’ Show in Orlando, FL.

Multifamily starts are expected to edge 2 per cent lower this year to 354,000 units from a projected 360,000 total in 2017 and fall another 3 per cent to 344,000 in 2019.

Meanwhile, the national rental vacancy rate registered a slight uptick last year, but stands at its low mid-1990s level of 7.5 per cent.

US Building Materials Prices: Full Year 2017

The monthly NAHB/Wells Fargo Housing Market Index includes a set of “special” questions on a topic of current interest to the housing industry, according to NAHB January 6. In December 2017, the special questions asked builders about the problems they faced in 2017 and expect to face in 2018.

After ‘shortage of labour’ concerns, the survey found the second most significant problem in 2017 was building material

prices-cited by 77 per cent of builders. In 2011, the building materials prices was rated significant by 33 per cent of builders who responded to the survey. That share increased to 46 per cent in 2012.

In fact, this issue showed the largest increase by far between builders noting it was a problem in 2016 and 2017.