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Key takeaways:
Housing starts showed some upward momentum in June, though it was all driven by stronger multifamily construction.
According to the US Census Bureau, total housing starts were at a seasonally adjusted annual rate (SAAR1) of 1.321 million units, up 4.6% from an upwardly revised 1.263 million in May. However, that headline figure once again masked contrasting trends between the two segments.
Single-family housing starts fell 4.6% to 883,000 units, the lowest levels in almost a year, while multifamily starts rose 30% to 438,000 units. The revisions to the prior two months were significant and positive, as May and June saw an additional 52,000 units.
Meanwhile, building permits, a key indicator of future construction, held steady in June at 1.397 million units. Regionally, the only region to show a positive gain was the Northeast, where June’s apartment construction numbers posted a 73% increase over May.
From this month, Canadians will be paying combined countervailing and anti-dumping duties of 35.19% following today’s release of the sixth annual CVD review by the US Department of Commerce.
West Fraser and Canfor were individually investigated by Commerce and were assessed final CVD rates of 16.82% and 12.12%, respectively. All other Canadian shippers will pay the weighted average of the two companies investigated, or 14.63%. The new CVD rate will go into effect when it’s published in the Federal Register, likely next week. Canadians are currently paying a CVD rate of 6.74%.
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Two weeks ago, Commerce announced the final anti-dumping duty rate would rise to 20.56%, up from the previous rate of 7.66%. Therefore, the new combined AD/CVD duties that Canadians will pay on shipments to the U.S. will jump to 35.19%, up from the previous level of 14.40%.
Canfor’s combined AD/CVD rate will be 47.65%, while West Fraser’s will be 26.47%.
Elevated mortgage rates, weak buyer traffic and ongoing supply-side challenges continued to act as a drag on builder confidence in August, as sentiment levels remain in a holding pattern at a low level.
Builder confidence in the market for newly built single-family homes was 32 in August, down one point from July, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Builder sentiment has now been in negative territory for 16 consecutive months and has hovered at a relatively low reading between 32 and 34 since May.
“Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward. Builders are also grappling with supply-side headwinds, including ongoing frustrations with regulatory policies connected to developing land and building homes.”NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C.
“Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward. Builders are also grappling with supply-side headwinds, including ongoing frustrations with regulatory policies connected to developing land and building homes.”
North American lumber production totaled 24.032 billion board feet through May, which was down 2.8%, or 685 million board feet, from the same period a year ago, according to the Western Wood Products Association’s Lumber Track publication.
US lumber production totaled 15.579 bbf through May, down 0.4% from the first five months of 2024. Total production in the South was up 0.6%, while output in the West was down 2.1%. Total lumber production in Canada was 8.453 bbf through May, down 6.9% from the same period a year ago. Production in British Columbia was down 8.2%, while output East of the Rockies was down 6.3%.
The ongoing Section 232 investigation into wood product imports is likely adding an additional risk premium to market prices now. This is despite persistently weak demand — apparent consumption is down 3% year to date. Modest import surges in March were quickly absorbed, and supply cuts have been limited.
The near-term forecast for construction is dim due to high economic uncertainty and tariffs. The current effective tariff rate for the US is over 16%, the highest rate since the 1930s, and the construction market is uniquely and deeply vulnerable to tariffs. Higher material prices make building projects more expensive, and smaller, regional homebuilders, who often operate on tighter margins, are especially susceptible to these cost hikes.
Understanding the intricate relationship between lumber prices, housing construction trends and inflation is crucial for navigating the US wood products market. Speak to one of our experts about the latest market insights and price data from Fastmarkets.