US lumber demand strengthens

US lumber markets are finding good support from the US housing recovery. Housing starts are continually increasing and turning into real demand for timber. Saw mills in the US have been burned by predicting housing recovery in the past, and as such have held back from increasing production.

Another encouraging sign seen recently was the Home Depot’s announcement of sales worth US$18.1 billion this year, up 4%. This was better than expected and largely put down to the increases in the housing market. US construction will also increase in the coming months as the North East recovers from Hurricane Sandy. There is extensive rebuilding required that will likely boost lumber markets.

The Crow’s construction materials cost indices are up this month, by 7% for the Western Region and 15% for the Southern Region. Both are
now just under 50% higher than they were a year ago. US lumber imports have yet to pick up in any significant fashion but will if the recovery continues.

US housing starts are now sitting at the five year average. There
has been large growth in both single family homes being built and in apartments, which are up 25% since last month. There has been some criticism of the numbers as they are seasonally adjusted, some believe that the bias for winter inflates numbers too greatly as they take into account the economic downturn starting in winter of 2008. For now though, the increased profit at the Home Depot and rising costs for sawn timber show a real demand for construction materials in the US.