- Natural Resource Report - https://naturalresourcereport.com -

Slow lumber recovery could last 4 years

Spread the love
  • [1]

By Rick Sohn, PhD
Umpqua Coquille LLC

Timber Industry Report

Seasonal changes in the stud and log price relationship are accompanied by lower Housing Starts and Building Permits. This slow recovery could last 4 more years. Statistics from recent years for lumber manufacturing, home construction, and housing markets are compared.

chart-sohn-july2014 [2]
Interpretation and Looking Ahead.

Lumber prices went up April to May, and log prices dropped, making a more favorable business climate for mills in May. Lumber prices continued to drop slightly in June and log prices can be expected to drop as well, as the summer progresses. But $674 at this time of year is still a strong log price. This is a typical pattern as more private landowners add their logs to the available summer supply.

If only housing would have more strength. Starts and permits are actually down from April to May, not showing much progress, with housing starts up only about 100,000 since last Spring.

Fortunately, unsold inventories remain relatively tight, and mortgage rates are staying low. This is attractive for buyers, but with home values climbing just over 5% in the last year, the more mobile millennials and young generation x’ers (ages 20-40) who are renters, are more reluctant than an earlier generation to invest new homes, despite the benefits and privacy of owning your own home.

The good side of the slow improvement in the housing economy, is that both log prices and housing starts are expected to continue to rise through 2018. This projection was made by speakers at the Northwest Farm Credit Services Annual Forest Products Symposium for clients, held in June. Looking this far ahead, there is always the caveat of world or national economic surprises, that could upset the trend.

Data reports used with permission of: 1Random Lengths. Kiln Dried 2×4-8′ PET #2/#2&Btr lumber. 2RISI, Log Lines. Douglas-fir #2 Sawmill Log Average, Southern Oregon region. 3 US Dept of Commerce. 4Regional Multiple Listing Service, courtesy of Janet Johnston, Prudential Real Estate Professionals, Roseburg, OR. 5Freddie Mac. National monthly average. 6Mortgage-X, national average, most recent week. 7Zillow.com, National Median home value. (http://www.zillow.com/or/) © Copyright Rick Sohn, Umpqua Coquille LLC. Issue #7-6. For more information, questions, or permission to reprint, please e-mail [email protected]

  • [1]