December 19, 2016 --
By Rick Sohn, PhD
Umqua Coquille LLC
Housing starts achieved a new 9-year high, while interest rates jumped 56 basis points to 4.03%. Logs topped 700 for the first time in 20 months. Recent trends of lumber, logs, home construction, and housing markets, are compared to 2009 and 2005.
* A lumber board foot measures 12 inches by 12 inches by 1 inch. The log board foot is based on an industry standard pattern for sawing straight boards from round, tapered logs. The leftover wood and bark become chips and sawdust, which are used for paper, fiberboard, and fuel to make electric power. In the Pacific Northwest two truckloads of logs make enough wood product to build a new home.
Interpretation and Looking Ahead.
The biggest news is the 56 basis points, or 0.56 of 1% rise in the mortgage interest rate in the last month – from 3.47 to 4.03 (the latest weekly rate), basically since the election. The rise correlates with an increased stock market, and less interest in bonds.
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