US Economy, Home Building 2020

While Canada has diversified it’s softwood lumber export destinations since the US housing market downturn of 2008 to …. well, in a way still ongoing, the US remains solid customer of 60% of Canada’s softwood lumber production by volume.

Macroeconomic conditions in the US have changed drastically in the past decade; not just the Millennial demographic reaching an average of 30 years of age, but also the mix of housing type demand has changed since the benchmarks established in the 1970s. There is now sales of a much higher ratio of condominiums and multi-family dwellings than in past decades; and this seems like a permanent change.

These low-rise apartments and townhome-type buildings use a different mix of construction framing lumber products than do free-standing single-family homes.

Western Spruce KD 2x4 to 2x12 #2&Btr prices Dec 2019

Since lumber prices come out every week but housing data is released monthly, one could use weekly wholesale lumber prices to estimate different types of US home building activity.

Madison's Historical Softwood Dimension Lumber Price Comparison Table DEC 2019

Many economics regard 2019 as “a recession avoided” and currently none such looms in the horizon. Most are at a loss to explain a stock market buoyed by the gross buy-back of a company’s own shares. The largest companies on US stock exchanges are self-invested to a much higher degree than has been historical. It is literally unknown how the stock market will behave under these conditions.

Many agree a recession in 2019 was — somehow — averted and after a downturn in 2018 the US housing market is poised for a cycle of improvement.

This improvement usually last approximately 1.5 years, this time is possible to be muted, however undeniable, as supply-demand conditions and inventories currently favour potential home sellers.

WSPF-SYP-ESPF-2x4-Lumber-Price vs US-House Prices: Average 2016-2019

While still quite opaque, the North American construction framing softwood lumber market ended 2019 in a rather robust condition; with order files at sawmills into January and prices remaining firm over the previous week.

Most suppliers entered the New Year in a good condition; with log stocks robust and loaded trucks of lumber booked to ship already this week.

WSPF-SYP-ESPF-2x4-Lumber-Price vs US-House Prices: Median 2016-2019

Madison’s publishes this week’s lumber price list, accessed by subscribers via login, Friday morning (tomorrow). December housing data will be released as usual in the third week of January.

Madison’s will be attending the US National Association of Home Builders annual trade show in Las Vegas that week.