US Housing Starts November & Softwood Lumber Prices December: 2023

The new housing market remains underpinned by an acute shortage of previously owned homes available for sale. Chief economist at Comerica Bank in Dallas, Bill Adams, said, “American housing demand is permanently higher than before the pandemic since people are spending more time at home. As long-term interest rates fall, builders will add more supply to the housing market to meet that demand, fueling economic growth.”

After a bit of volatility in recent months, total housing starts in the US for November 2023 skyrocketed up to 1.560 million units, compared to the 1.359 million units reported for October 2023, and were up +9% from the November 2022 rate of 1.427 million units.

Building permits meanwhile, an indicator of construction activity to come, showed a decline as is the normal seasonal cycle for winter, down -2.5%, at 1.460 million units, from the October rate of 1.498 million. This is more than +4% above the November 2022 rate of 1.402 million.

These permits will eventually become starts and will help to underpin residential construction.

At the same time, the Madison’s Lumber Prices Index for the week ending December 15, 2023 was US$446 mfbm. This is up by +0.5%, or +$2, from the previous week when it was US$414.

As the annual Holiday break approached, Western S-P-F lumber suppliers in the United States reported a reserved market overall. There was still some preparatory winter buying, but the number and volumes of orders were small as customers only wanted enough hand-to-mouth coverage to squeak through into 2024. With sawmills in good shape to close out the year and getting ready for holiday shutdowns, there was a slight feeling of undersupply in the market. No urgency was exhibited on the side of buyers however, as they felt no pressure from their own charges with construction activity seasonally slow.

Sales of Western S-P-F lumber in Canada continued to enter hibernation mode. Producers were in the process of tapering off their operations for the holiday break and demand was flat to down as buyers increasingly retreated to the sidelines.

Those customers who needed material pronto had little trouble finding specific mixes and LTL loads from secondary suppliers for quick shipment. Weather in much of Western Canada remained comparatively clement for the time of year, keeping transportation disruptions at lower-than-normal levels.

“The pullback in mortgage rates over the last month or so has already helped to bring potential buyers back into the search process. … [but] the supply of existing homes on the market remains extremely low, even as demand is perking up,” said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. “Homebuilders could not ask for a better setup, as they will be relied upon to provide the bulk of the supply that potential buyers require.” Starting to catch up after lagging quite a bit for most of last year, housing completions rose by more than +5% from October, to an estimated annual rate of 1.447 million housing units in November 2023. Units under construction continued to remain high, at 1.685 million units. Of those, 680,000 were single-family homes. 

November starts of single-family housing, the largest share of the market and construction method which uses the most wood, also shot up, by +18%, to a rate of 1.143 million units, from 969,000 units in October. Single-family authorizations were at 976,000 units, which is almost +1% above the October figure of 969,000 units. Building permits are generally submitted two months before the home building is begun, so this data is as indicator of January 2024 construction activity. As for those 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 December 15, 2023 was up by +$24, or +6%. Compared to two years ago when it was $750, that week’s price is down by -$336, or -45%.