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Report from
North America
Housing starts fall to a four-year low
Construction of new US homes fell 5.5% in May, the
lowest level in four years as builders pulled back on new
projects. The pace of construction hit a speed bump as
builders grappled with higher-than-normal financing costs
as well as elevated mortgage rates that affect home buyers.
Housing starts fell to a 1.28 million annual pace from 1.35
million in April, the government reported. The data fell
short of Wall Street’s expectations of 1.38 million houses.
Housing starts fell in May to the lowest level since June
2020, during the depths of the COVID-19 pandemic. Both
single-family and multi-family starts posted a decline
across most of the nation.
Builders appear despondent, saying they are feeling the
effects of the high costs of loans, which has dissuaded
buyers from taking on expensive mortgages and has made
capital for construction expensive. In June, builder
confidence, as measured by the National Association of
Home Builders (NAHB)/Wells Fargo Housing Market
Index, fell to its lowest reading since December.
Carl Harris, NAHB's chair said "Persistently high
mortgage rates are keeping many prospective buyers on
the sidelines. Home builders are also dealing with higher
rates for construction and development loans, chronic
labour shortages and a dearth of buildable lots."
See: https://www.census.gov/construction/nrc/current/index.html
Housing starts rise to seven-month high in Canada
Canada’s housing starts jumped to the highest level in
seven months as the country’s two largest provinces
increased investment in construction on apartments,
townhouses and condominiums.
Builders started work on an annualised 264,506 units in
May according to data released by the Canada Mortgage
and Housing Corp., an increase of 9.7% from a month
earlier.
Ontario and Quebec, the country’s most populous
provinces, led the increase in starts, rising 18% and 67%
respectively. Housing starts fell 16% in British Columbia,
Canada’s westernmost province. The number of single-
detached homes on which construction started during the
month was little changed, meaning the gains were
concentrated in multiple-unit builds.
The Canadian government has announced billions in new
loans and tax breaks intended to encourage construction as
housing affordability has worsened. The country’s chronic
shortage of homes has been further aggravated by an
influx of temporary residents that has driven population
growth to one of the highest levels in developed countries.
CMHC estimates Canada needs to build at least 3.5
million additional housing units by 2030 to restore
affordability.
See: https://www.cmhc-schl.gc.ca/professionals/housing-
markets-data-and-research/housing-data/data-tables/housing-
market-data/monthly-housing-starts-construction-data-tables
Rising mortgage rates - record-high prices - home
sales falling
Sales of previously occupied US homes fell in May for the
third straight month as rising mortgage rates and record-
high prices discouraged many prospective homebuyers
during what's traditionally the housing market’s busiest
period of the year.
Existing home sales fell 0.7% in May compared to April to
a seasonally adjusted annual rate of 4.11 million the
National Association of Realtors announced. Sales were
down 2.8% compared with May last year.
Despite the decline in sales home prices climbed
compared with a year earlier for the 11th month in a row.
The national median sales price rose 5.8% from a year
earlier and was up 51% from five years ago. Home prices
rose even as sales slowed and the supply of properties on
the market hit its highest level in four years.
Existing-home sales in the Northeast in May were
identical to April at an annual rate of 480,000, a decline of
4% from May 2023. In the Midwest, existing-home sales
were unchanged from one month ago at an annual rate of 1
million in May, up 1% from one year ago. Existing-home
sales in the South fell 1.6% from April to an annual rate of
1.87 million in May, down 5.1% from the previous year.
In the West, existing-home sales in May were equivalent
to April at an annual rate of 760,000, a drop of 1.3% from
one year before.
See: https://www.nar.realtor/newsroom/existing-home-sales-
retreated-1-9-in-april
US again adds more jobs than expected
The monthly jobs report from the US Labor Department
showed a 272,000 increase in May, while the
unemployment rate was little changed at 4%. The total
sailed past the 190,000 forecasted by the Dow Jones
consensus estimate and was over 100,000 jobs more than
the 165,000 positions created in April.
Employment continued to trend up in several industries,
led by health care, government, leisure and hospitality, and
professional, scientific and technical services. Job losses
were seen in department stores with 5,000 and furniture
and home furnishing retailers at 4,000. Mining,
construction, manufacturing, and other industries showed
little change, the report said.
The job market has remained surprisingly resilient despite
high inflation and interest rates, but it’s gradually cooling.
After adding well over 200,000 jobs a month in the first
three months of the year, job gains slowed in April.
A separate Labor Department report this week showed that
job openings fell to 8.1 million in April, the lowest tally
since early 2021 and well below the record 12 million in
early 2022. The number of job vacancies per unemployed
worker has slipped to 1.2 from a high of 2 during 2021, in
line with the pre-pandemic level.
See: https://www.bls.gov/news.release/empsit.nr0.htm
and
https://www.msn.com/en-us/money/markets/jobs-report-today-
economy-added-booming-272-000-jobs-in-may-unemployment-
at-4/ar-BB1nO68V?ocid=BingNewsSerp
Consumer sentiment cools on price concerns despite
strong economic news
Consumer sentiment tumbled in June despite largely
resilient growth in the US economy as higher prices
remained a pain point for Americans.
The latest University of Michigan consumer sentiment
survey showed sentiment hit its lowest level in seven
months during June. The index reading for the month
came in at 65.6, down from 69.1 in May and lower than
the 72 economists had expected.
The decline in the index represents a continued trend
among consumers who are fed up with higher prices
regardless of whether inflation is cooling or if the labor
market remains solid.
See: http://www.sca.isr.umich.edu/
US manufacturing down again
Economic activity in the manufacturing sector contracted
in May for the second consecutive month and the 18th
time in the last 19 months according to the latest
Manufacturing ISM Report On Business. The
Manufacturing PMI registered 48.7% in May, down 0.5
percentage point from the 49.2% recorded in April. A
rating above 50% means expansion, while a rating below
50% indicates contraction.
ISM Chair Tim Fiore is quoted as saying “US
manufacturing activity continued in contraction after
growing in March, the first expansion for the sector since
September 2022. Demand was soft again, output was
stable, and inputs stayed accommodative. Demand
remains elusive as companies demonstrate an
unwillingness to invest due to current monetary policy and
other conditions. These investments include supplier order
commitments, inventory building, and capital
expenditures.”
Of the 17 industries ISM surveys, seven reported
contraction in May, including both the Wood Products
industry and the Furniture & Related Products industry.
However, comments from respondents in the furniture
sector are optimistic.
“Business is picking up, with incoming bookings
increasing,” said one Furniture & Related Products
industry executive.
See: https://www.monitordaily.com/news-posts/ism-report-on-
business-manufacturing-pmi-at-48-7-in-may/
and
https://www.ismworld.org/supply-management-news-and-
reports/reports/ism-report-on-business/pmi/october/
False declarations on timber imports
A home goods company in Tacoma, Washington, was
found guilty this month under the Lacey Act of making
false declarations regarding the species and harvest
location of timber used in wooden cabinets and vanities.
The company was fond to have imported five containers of
wooden cabinets and vanities, all of which were falsely
declared. The products, which were produced in China,
were declared as of a species of wood harvested in
Malaysia. By doing so, the company evaded more than
US$850,000 in import duties.
The Lacey Act requires that importers of wood products
file a declaration which describes the scientific genus and
species as well as the harvest country of imports that
contain timber. The company was sentenced to pay
US$360,000 in fines and serve three years of probation.
See:
https://www.woodworkingnetwork.com/news/woodworking-
industry-news/tacoma-company-pleads-guilty-false-declarations-
timber-imports
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