F&W Forestry | housing starts

It’s taken almost a decade for housing starts to slowly return to 1.3 million units—the threshold when housing begins to have an impact on lumber prices—but the housing sector appears to have plateaued.

“It took almost 10 years to slowly but steadily get to a decent level of housing starts, raising expectations for all of us in the tree-growing business, and now we have stalled right at the point where demand might have created some upward pressure on prices paid for trees,” writes Marshall Thomas, president of F&W Forestry Services, Inc., in the winter issue of his company’s newsletter, F&W Forestry Report.

In late 2016, housing starts reached 1.3 million, but since then they have bounced between 1.1 and 1.3 million units, with little to no trend.

“I’m afraid there is nothing in the outlook to suggest that 2019 will be much different from the last two years,” Thomas writes. “But most forecasts since 2008 have been wrong, including mine, so maybe I’ll be wrong this time.”

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Housing starts are finally approaching 1.3 million starts per year, a level that traditionally has led to upward pressure on sawtimber stumpage prices. However, there are factors at work that could undermine this pressure on prices, the head of one of the nation’s largest forest management firms reports.

Marshall Thomas, president of F&W Forestry Services, Inc., reports in his firm’s spring newsletter that while housing starts are approaching this milestone level, there is likely to be a delay in a corresponding increase in timber prices.

“It may be traditional wisdom doesn’t apply for two reasons,” Thomas writes. “First, we have too much standing inventory of pine sawtimber, and second, the houses being built today may not use the same amount of lumber that was used prior to the recent housing crisis.”

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Posts

More Of The Same For 2019

Timber Prices Remain Flat Despite Upward Trajectory Of Housing Starts