Single Family Shortfall

While the good news in reported U.S. housing starts is an 8% increase year over year, clearly the annual pace of single-family construction is falling well short of early projections. As noted in a February post here, a forecast from the National Association of Homebuilders (NAHB) called for single-family production to reach 822,000 units this year – an increase of 32 per cent over last year. The August data released this morning indicates an annual pace of 643,000 – an increase of just 4 per cent. The data underscores ongoing uncertainties hanging over housing activity despite confirmation of continued low interest rates coming out of Fed reports this week.

Meanwhile, the NAHB confirms softwood lumber prices rose 2.4 per cent in August, but are down modestly from an earlier March peak. In the face of gradually increasing demand for building materials, the NAHB attributes price softness to “additional productive capacity being brought back to the wood products sector”. As one lumber trader was overheard to say, “Nothing solves high prices like high prices”.

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