The inside word with forest product industry players this year is that hot US remodelling and DIY activity, as well as continued stable demand for industrials, are keeping North American lumber supplies lean. Many agree that — barring an extreme circumstance — lumber manufacturing volumes have stabilized and solid wood prices have found a floor.
A noticeable stocking-up by major lumber wholesalers and the big box stores about a month and a half ago had lumber traders buzzing about positive numbers for US building and renovations this year.
As we approach the US Memorial Day holiday, acknowledged as the unofficial start to summer holidays and outdoor housework, the next couple of weeks’ retail lumber sales will provide indication of lumber demand for the rest of this season.
The latest US existing home sale data also suggest more stability for the long-suffering US real estate market.
Lumber Demand
US new home sales data for April was released Friday morning:
Newly built US home sales rose in April climbed 6.4 per cent from March to a seasonally adjusted annual rate of 433,000, the Commerce Department said Friday. March’s rate was revised up to a 407,000 pace.
Friday’s report included new seasonal adjustments for the sales pace for all months from January 2012. Those revisions showed that the rate of home purchases was slightly weaker in the second half of last year through February of this year than previously estimated. However, a Commerce Department economist said the new monthly figures didn’t affect the overall sales estimate for 2013.
Sales of new single-family houses represent a small fraction of homes purchased in the US, but the report provides a more timely reading of the housing market than other measures because it tallies sales at the moment a contract is signed rather than at its closing.
Compared with a year earlier, sales of new homes were down 4.2 per cent. The median price of a home remained elevated at US$275,800. That was down slightly from March, which was the highest on record.
Builders ramped up construction on new homes for the third straight month in April, with project starts rising 13.2 per cent from the prior month, the Commerce Department said in a separate report last week. The increase was fuelled by a jump in multi-family homes, but construction of single-family houses rose as well. New applications for building permits, a sign of future construction, grew 8 per cent in April from the month earlier.
Previously owned US home purchases increased in April as a bigger supply of properties lured buyers and raised prospects for a stronger spring buying season.
The 1.3 per cent gain, the first this year, pushed sales to a 4.65 million annualized rate, National Association of Realtors data showed Thursday. The number of available properties climbed to an almost two-year high, helping slow the pace of price appreciation.
Much of the gains were concentrated in the volatile condominium market, which experienced growth of 7.3 per cent. Sales of single-family homes were up just 0.5 per cent last month. The latest numbers show home-buying running significantly below the 2013 pace, when 5.1 million existing homes were bought, well below the 5.5 million that is consistent with a healthy housing market.
A gain in home construction last month showed builders are responding to limited inventory at the same time mortgage rates retreat and lure prospective buyers.
Compared with a year earlier, purchases were down 7.3 per cent. The gain from a month earlier was limited to stronger results in the West and the South.
Investors accounted for 18 per cent of the home purchases last month, up from 17 per cent a month earlier. Seven of 10 investors paid cash. All-cash transactions accounted for about 32 per cent, about the same share as the last year, the report showed. First-time buyers represented 29 per cent of all transactions.
Sales of single-family homes increased 0.5 per cent to an annual rate of 4.06 million. Purchases of multifamily properties — including condominiums and townhouses — jumped 7.3 per cent to a 590,000 pace.
Potential buyers are starting to find relief in cheaper borrowing costs. The average rate on a 30-year, fixed mortgage fell to 4.14 per cent in the week ended Thursday, the lowest since October, according to Freddie Mac.
For April 2014, the housing inventory jumped 16.8 per cent, to 2.29 million existing homes. At the current sales rate, this represents a 5.9-month supply of existing homes, according to the realtor’s association, a full 15.6 per cent above March’s supply.
The inventory of unsold homes on the market increased 6.5 per cent from a year-ago and the median home price increased at its slowest pace since March 2012.
The months’ supply increased to 5.9 months, the highest since August 2012, from 5.1 months in March. Six months’ supply is normally considered as a healthy balance between supply and demand.
As sales fell over the last 12 months, the median sales price increased 5.2 per cent, to US$201,700.
The median time on the market fell for the fourth straight month, down seven days from March to 48. Compared to April 2013, houses spend an average of five days less on the market .
“Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point,” said Lawrence Yun, NAR chief economist, in today’s press release. “Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”
Rection from some industry players according to StarTribune . . .
Deutsche Bank: Importantly, the inventory of homes for sale rose 18.6 per cent to 2.29M, thereby nudging the month’s supply of homes on the market at the current selling rate to 5.9, which is a relatively healthy level of inventory.
Jonathan Smoke, chief economist, Hanley Wood: “For several months now I’ve been trying to highlight the fact that the total volumes are not nearly as important as the composition of what is being sold and who is buying. You can fret all you want about the total volumes being up or down, but the reality is that the residential real estate market is getting healthier and healthier each month. The health is reflected in the share of non-distressed, normal transactions continuing to rise; more and more consumers, not investors, are buying; and prices are remaining firm amidst continued demand relative to limited supplies.
Sterne Agee chief economist, Lindsey Piegza: “Housing activity remains tepid with the vast majority of sales in the multi-family unit space. After back-to-back months of declining sales at the start of the year, warmer spring weather hasn’t been enough to create noticeable momentum in housing purchases, sentiment echoed yesterday by NY Federal Reserve President William Dudley.