US home construction trended up in September
U.S. home construction rose a solid 1.9% in September
after having fallen in the previous month, as home
building continues to be one of the bright spots of the
The increase last month pushed home construction to a
seasonally adjusted annual rate of 1.42 million homes and
apartments after a 6.7% drop in August, the U.S.
Department of Commerce reported. Applications for
building permits, a good barometer of future activity, rose
an even stronger 5.2% to 1.55 million units.
Construction of single-family homes surged by 7.8%,
offsetting a 14.7% drop in the smaller apartment sector.
Single-family construction is now at its highest level since
2007.Construction was up in every region of the country
except the Midwest which registered a 32.7% plunge.
Construction surged 66.7% in the Northeast with smaller
gains of 6.2% in the South and 1.4% in the West.
US existing-home sales soar
U.S. existing-home sales grew for the fourth consecutive
month in September, according to the National
Association of Realtors. Each of the four major regions
witnessed month-over-month and year-over-year growth,
with the Northeast seeing the highest climb in both
Total existing-home sales rose 9.4% from August to a
seasonally adjusted annual rate of 6.54 million in
September. Overall sales are up 20.9% from a year ago
(5.41 million in September 2019).
September 2020 saw existing-home sales increase by
16.2% in the Northeast, by 9.6% in the West, by 8.5% in
the South and by 7.1% in the Midwest.
Sales could be more robust if there were more homes
available. The inventory of homes for sale fell 19.2%
annually to just 1.47 million homes for sale at the end of
September. At the current sales pace that represents a 2.7-
month supply. That is the lowest since the Realtors began
tracking this metric in 1982. Tight supply continues to
push prices higher. The median price of an existing home
sold in September was $311,800, a 14.8% gain compared
with September 2019.
Builder confidence continues to rise
In a further show of strength for the U.S. housing sector,
builder confidence in the market for newly-built singlefamily
homes increased two points to 85 in October,
further surpassing the previous all-time high of 83
recorded in September according to the latest
NAHB/Wells Fargo Housing Market Index (HMI). These
are the first two months the index has ever been above 80.
Buyer traffic remains high and record-low interest rates
are keeping demand strong as the concept of ¡®home¡¯ has
taken on renewed importance for work, study, and other
purposes during and after the virus-induced downturn.
However, it is becoming increasingly challenging to build
affordable homes as shortages of lots, labor, lumber, and
other key building materials are lengthening construction
Hardwood sawnwood prices stable but sawn softwood
prices continue up
Softwood sawnwood prices in the U.S. rose by 27.4% in
September, leading the overall price index of materials and
components for construction up 2.1% from August,
seasonally adjusted, according to the U.S. Bureau of Labor
Statistics latest producer price report.
According to the report, the price of softwood sawnwood
has risen 81.2% over the last 12 months. In contrast, the
price of hardwood sawnwood has fallen by 1.4% from a
year ago, although it did rise by 1.7% from August to
Softwood sawnwood prices, both for framing sawnwood
and for plywood products, rose even more strongly in
September than in earlier months. While the accelerating
price of sawnwood shown by the report is remarkable,
other sources indicate that the worst might be over.
The National Association of Homebuilder¡¯s tracking of
sawnwood prices indicates that prices peaked in the
middle of September and were easing by the end of the
month. Still, futures prices for Spring 2021 deliveries
remain higher than sawnwood prices early in 2020.
That sawnwood prices are being driven higher by sawmill
capacity is indicated by the fact that prices for timber have
been relatively stable. They are up only about 5% from the
lows they hit in the spring and are trading below the peaks
they reached in early 2018.
Again wood products sector leads manufacturing
Economic activity in the U.S. manufacturing sector grew
for the fifth consecutive month in September, according to
the nation's supply executives in the latest Manufacturing
ISM Report on Business. And for the fourth consecutive
month, wood products manufacturers reported the highest
growth among manufacturing industries.
However, the wood products sector reported a decrease in
inventories and a shortage of sawnwood. One respondent
said, ¡°raw material shortages, especially of hardwood logs,
are starting to impact overall supply.¡±
According to the report, manufacturing performed well in
the month with demand, consumption and inputs
registering growth indicative of a normal expansion cycle.
USTR once again blocks timber from Peruvian
United States Trade Representative Robert Lighthizer has
announced the U.S. will continue to block future timber
imports from Inversiones La Oroza SRL (Oroza), a
Peruvian exporter, based on illegally harvested timber
found in its supply chain.
This is an extension of an earlier enforcement action and
marks the third time that the U.S. has taken such an
enforcement action under the United States-Peru Trade
Promotion Agreement¡¯s (PTPA) Annex on Forest Sector
Governance (Forest Annex).
The PTPA includes a requirement for Peru to conduct
audits of particular timber producers and exporters, and
upon request from the U.S., perform verifications of
particular shipments of wood products. The original
verification process conducted three years prior by Peru
revealed that significant portions of the Oroza shipment
were not compliant with the applicable laws and
regulations governing the harvest of and trade in timber