Good news for housing

By Rick Sohn
Umpqua Coquille LLC

The fundamentals held their ground, good news long term. Industry prices dropped somewhat, but this is the season for weaker log and stud prices. See below for details and a six-year span of prices and analysis of lumber, logs, housing, and mortgage stats.

Information and interpretation.

Lumber and Logs are predictably down a bit this month, due to the decreased demand of the season. Mills are taking long holidays to keep inventories in control.

On the good side, Housing Starts have held up and Building Permits bounced back with Permits reaching 653. Unsold inventories held below 7 months, and Mortgage Rates are near all-time lows, still.

Looking deeper at Housing Starts and Building Permits, the 650 threshold has only been crossed 4 other times in total since 2008. Also, with the exception of March and April of 2010, it has been since October 2008, in the midst of the housing crash, since the sum of starts and permits in any one month, has exceeded 1281, this month’s total. It’s nice to see this resurging strength prior to the anticipated Spring bounce in wood product demand.

There is a housing start in my neighborhood, the first in years, and I talked to someone who wants to build another new house in another town. This fundamental, somewhat scattered, desire for building and living in one’s own home is an American tradition that will survive a long time, even when inexpensive pre-owned homes are flooding the market.

Data reports used with permission of:
1.) Random Lengths. 2”x4”x8’ precision end trimmed hem-fir studs from southern Oregon mills. Price reported is Dollars per Thousand Board Feet for the most recent week. One “board foot” of product measures 12 inches by 12 inches by one inch thick.
2.) RISI, Log Lines. Douglas-fir #2 Sawmill Log Average Region 5 price. Current report is for the prior month. Dollars per Thousand Board Feet of logs are reported using standardized log measurements from the “Scribner log table.”
3.) Dept. of Commerce, US Census Bureau. New Residential Housing Starts and New Residential Construction Permits, seasonally adjusted, annual rate. Current report is for the prior month. Recent reports are often revised in bold. Also, major revision made each May, reaching 21/2 yrs back.
4.) Regional Multiple Listing Service RMLSTM data, courtesy of Janet Johnston, Prudential Real Estate Professionals Broker, Roseburg, OR. Inventory of Unsold Homes (Ratio of Active Listings to Closed Sales) in Portland Oregon, for most recent month available.
5.) Freddie Mac. Primary Mortgage Market Survey. 30-year Fixed Rate Mortgages Since 1971, national averages. Updated weekly, current report is for the prior full month.
Issue #4-11. © Copyright Rick Sohn, Umpqua Coquille LLC. For permission to reprint for nominal fee, Email [email protected]

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