US Housing Market January and Softwood Lumber Prices February: 2023

In 2022 the US began building 1.55 million homes, just a -3% drop from full-year 2021.

Single-family starts in 2022 totalled 1.01 million, down -10.6% from the previous year.

Total housing starts in the US for January 2023 were down -4.5% from the previous month, to 1.309 million units compared to the revised 1.371 million units reported for December, and dropped more than -21% from the January 2022 rate of 1.666 million.

An indicator of improving construction activity to come, building permits were essentially flat, down only -0.1%, at 1.339 million units from the December rate of 1.337 million. This is -27% below the January 2022 rate of 1.841 million. These permits will eventually become starts and will help to underpin residential construction.

While housing starts were slightly down in full-year 2022, housing completions posted a +1% annual gain, rising to an estimated annual rate of 1.406 million housing units. Continuing recent drops, there were 1.673 million units under construction. Of those, 752,000 were single-family homes, compared to 769,000 in December 2022. 

Looking at lumber prices, in the week ending February 24, 2023, the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$417 mfbm, which is down by -$33 or -11%, from the previous week when it was US$470 mfbm, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter. This is up by +$45, or +12%, from one month ago when it was $373.

STAY AHEAD of US housing price data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices is used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.

The U.S. Census Bureau and the US Department of Housing and Urban Development released February 24 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.

Also rising after struggling for the second half of last year, sales of new US single-family homes in the US increased for the fourth month in a row, at 670,000 units, which is up more than +7% from December’s upwardly revised 625,000 and is a -19% drop compared to January 2022 when it was 831,000.

At the sales pace in January, it would take almost 8 months to clear the supply of new houses on the market, down from a lengthy 9 months in December. For full-year 2022 an estimated 644,000 new homes were sold, which is -16.4% below the 2021 figure of 771,000.

There were 439,000 new homes on the market at the end of last month, down -4.8% from 461,000 in December.

Houses under construction accounted for 52% of the inventory sold, with homes not started making up 26%. Completed houses accounted for 23% of the inventory, a big improvement from 15% the previous month. 

Dropping from astonishing highs last year, the median sales price in January fell by -3.3% to US$427,500, from US$442,100 in December, and is almost flat from one year ago.

As for those lumber prices, compared to the same week last year, when it was US$1,330 mfbm, the price of Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) for the week ending February 24, 2023 was down by -$913, or -69%.

Compared to two years ago when it was $1,040, that week’s price is down by -$623, or -60%.