It is important to note that month-over-month starts and permits have indeed dropped, however new building and permits activity for the first seven months of this year were up compared to January to July 2021.
The latest US housing starts and US new home sales data, for July 2022, continued the downward trend seen in recent months, when mortgage and interest rate increases hit the housing market.
Total housing starts in the US for July 2022 fell -9.6% to 1.446 million compared to June, and were down -8.1% from the July 2021 rate of 1.573 million.Data for June was revised higher to a rate of 1.599 million units from the previously reported 1.591 million units. However, total starts year-to-date are up almost +4% compared to the first seven months of 2021.
Meanwhile, building permits were again almost flat, down only -1.3% to 1.674 million from the revised June rate of 1.696 million. This is +1.1% above the July 2021 rate of 1.655 million. During the first seven months of this year there was a +3.2% increase in building permits from the same period in 2021.
The backlog of houses approved for construction that are yet to be started continued to break all-time record levels. Indeed, the number of houses approved for construction that are yet to be started increased yet again, to 296,000 units. The single-family housing backlog also rose, to 146,000 units.
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Combined, there was a very high 1.678 million units under construction, 816,000 of those single-family homes. This is well above the historical record-high of 1.628 million units that were under construction in 1973. These will eventually become starts and help to underpin residential construction.
June starts of single-family housing, the largest share of the market and construction method which uses the most wood again dropped sharply, down -8.1% to a rate of 916,000 units. Single-family authorizations were at a rate of 928,,000 units, which is -4.3% below the upwardly revised June figure of 970,000 units. Building permits are generally submitted two months before the home building is begun, so this data is as indicator of August construction activity.
Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Monthly Averages
Looking at lumber prices, staying flat from the previous week, for the week ending August 19, 2022 the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$624 mfbm, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter. This is up by $0, or 0% from the previous week when it was $624, and is down by -$47, or -7%, from one month ago when it was $671.
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The U.S. Census Bureau and the US Department of Housing and Urban Development released August 23 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.
Benchmark Dimension Softwood Lumber Prices: August 2022
Continuing drops seen for most of this year, sales of new US single-family homes fell again in July. There were 511,000 new single-family homes sold last month, which is down -12.6% from the downwardly revised June rate of 585,000 and is -29.6% below July 2021 when it was 726,000.
None of the new houses sold last month were below US$200,000.
At the sales pace in July it would take a comparatively high 11 months to clear the supply of houses on the market. Indeed, completed houses accounted for only 9.7% of the inventory, well below a long-term average of 27%, suggesting that some of these homes will not be built.
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There were 464,000 new homes on the market in July, the most since March 2008. This is up +1.5% from 457,000 in June, and is up a whopping +22% from 362,000 in July 2021. Houses under construction made up 67% of the inventory, with homes yet to be built accounting for about 24%.
A new report from Redfin showed that home sale cancellations soared in July to another two-year high as buyers retreated from the market. About 63,000 home purchase agreements were called off in July, equal to 16% of homes that went into contract that month.
Benchmark Softwood Lumber Prices Aug & US NEW Home Sales July: 2022
The median sales price of a new home rose by +5.6% to US$439,400, from US$414,900 in June. The July price is up +7.6% from one year ago, when it was $406,000. It is important to note that US new home prices rose sharply through all of 2021and most of this year to date.
As for lumber prices, compared to the same week last year, when it was US$390 mfbm, the price of Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) for the week ending August 19, 2022 was up by +$234, or +60%. Compared to two years ago when it was $850, that week’s price is down by -$226, or -27%.. Compared to two years ago when it was $590, that week’s price is up by +$94, or +16%.