Softwood Lumber Prices May 2020 & US Housing Starts: April 2020

Residential housing starts in the US slumped -30% from the previous month to a seasonally adjusted annual rate of 891,000, the lowest level since 2015, the Commerce Department said Tuesday.
Data for March was revised up to show homebuilding declining to a pace of 1.276 million units instead of dropping to 1.216 million units as previously reported.
Single-family housing starts dropped -25% to a rate of 665,000, also a five-year low.
US building permits fell -21% from March to a seasonally adjusted annual rate of 1.07 million, a five-year low. The slump in applications to build was the biggest since July 2008.

New reports for April show a drop of -30% in US housing starts this year compared to the same month in 2019.

Next month’s report could show a rebound in construction as the housing market begins to stabilize. US homebuilder sentiment rose by more than expected in May, it was reported Monday, following a record drop in April. In addition, mortgage applications increased in the last weekly survey from the US Mortgage Bankers Association.

US Housing Total Starts April 2020 & Benchmark Softwood Lumber Prices May 2020

WSPF-SYP-ESPF-2x4 Softwood Lumber Prices-2year-Total-US Housing STARTS

The USA purchases approximately 65% of Canadian lumber production, while Canadian buyers account for about 10%, and those in Japan take 6%.
However: US and Canadian customers purchase mostly standard grades (#2&Btr), while Japan buys almost exclusively premium or “appearance” grades (J-grade) which sells for quite a bit more than standard grade does.
It’s true that North American softwood lumber purchasing by China has increased massively since 20 years ago, but it is important to note that a lot of this wood does not go into home building or even construction. A significant proportion of this lumber is used to make crates, pallets, or packaging, or is remanufactured into other uses (railings, other). As such, the huge proportion of Canadian and US wood imported into China is low-grade (#3 / Utility) with the requisite lower price of course.

Benchmark Softwood Lumber Prices: May 2020

Western Spruce-Pine-FIr KD 2x4 #2&Btr prices MAY 2020

Continuing to make large improvements from the lows of April, for the week ending May 15, 2020, Western SPF 2×4 price jumped +$6, or +2%, compared to the previous week, said Madison’s Lumber Reporter May 19.
Prices for this benchmark construction framing dimension softwood lumber item gained a whopping +$44, or +14% from one month ago, when it was US$316 mfbm.
Compared to mid-May 2019, this price is up +$28, or +8%.

The below table is a comparison of recent highs, in June 2018, and current May 2020 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept 2015:

Madison's Historical Softwood Dimension Lumber Price Comparison Table MAY 2020