Benchmark Dimension Softwood Lumber and Panel Wholesaler Prices: December 2020
A consistent bright point in the confusing US economy for 2020 has been real estate and the housing market. As February US housing starts and home sales data came out, it became clear that home building and buying activity was headed for quite an upswing. While the economic effects of the response to the global pandemic unfolded in the spring, by summer the buying and selling of real estate in the US really took off. Due to this, new housing construction responded likewise upward. Naturally, due to high demand, home sales and prices also bounced up markedly.
A report from the Federal Reserve Bank of New York released this week found that the median household expects to increase their spending by +3.7% in the next twelve months, the most optimistic outlook since 2016. The median listing prices grew at +13% over last year, marking the 18th consecutive week of double-digit price growth.
Unseasonably strong softwood lumber sales persisted in the last full sales week of 2020, as prices on virtually every commodity advanced again. For the week ending December 18, 2020 the price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr rose another +$130, or +17%, over the previous week to US$874 mfbm, said Madison’s Lumber Reporter. That week’s price is +$278, or +47%, more than it was one month ago.
The USA purchases approximately 65% of Canada’s dimension lumber production mostly for home construction framing, while Canadian buyers account for about 10%, and those in Japan take 6%.
US Housing Starts & Benchmark Softwood Lumber Prices: 2018 – 2020
* Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS
Housing demand is strong entering 2021, however, the coming year will see housing affordability challenges as inventory remain low and construction costs are rising. Policymakers should take avoid increasing regulatory costs associated with land development and residential construction. — December 28, 2020
US National Association of Home Builders Chair Chuck Fowke
US New Home Sales & Benchmark Softwood Lumber Prices: 2018 – 2020
Sales of new single-family houses in November 2020 were at a seasonally adjusted annual rate of 841,000, according to estimates released jointly Tuesday by the US Census Bureau and the Department of Housing and Urban Development. This is -11% below the revised October rate of 945,000 but is +21% above the November 2019 estimate of 696,000. The seasonally-adjusted estimate of new houses for sale at the end of November was 286,000. This represents a supply of 4.1 months at the current sales rate. The median sales price of new houses sold in November 2020 was US$335,300.
At the end of December 2020, US buyers of Western S-P-F softwood lumber commodities continued to scramble to find limited material. Even as business slowed down across much of the continent with the approach of the holiday break, demand was unseasonably strong due to a persistent lack of supply and depleted inventories. Producers of Western S-P-F lumber in Canada, meanwhile, raised prices of bread and butter items by another +$90 to +$162. Sales activity only intensified as Canadian buyers cleaned out every stick of lumber before any cash wood could hit the starved US market.
Madison’s Lumber Reporter
Benchmark Dimension Softwood Lumber and Panel Wholesaler Prices: December 2020
In order to be in a good position for tax reporting, sawmills want to empty their yards of manufactured wood products before year-end. Also they want to have their log yards stacked as full as possible. Because demand has been so consistently strong, which is very unusual for December, lumber suppliers have been quoting wood sales into January 2021. This with the accompanying increase in prices, of course. Customers, while reluctant, can do nothing but accept the higher price lists because none have been stocking inventory and there continues to be rush of real building projects to serve.