VANCOUVER, BC, May 26, 2021 /CNW/ – Sales of new single-family houses in the US for April 2021 were at a seasonally adjusted annual rate of 863,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is down -6% from the revised March 2021 rate of 917,000 and again up an amazing +48% compared to the April 2020 rate, which was at a revised rate of 582,000. Unrelenting and extremely motivated demand accounts for this incredibly sharp rise.

Lumber prices rose yet again for the week ending May 14, however volumes sold were lower as customers refused to pay the higher prices. Those who needed wood for ongoing projects, or purposes that could not be delayed, sought out the specific products they needed only and paid whatever the asking price was. Accepting delivery as soon as possible was more important to them than price. However actual sales were down because buyers did not accept how high prices have become. Does this mean North America construction framing dimension softwood lumber prices have reached the top? Perhaps.

Does it mean prices will start going down? Possibly; but more likely it means prices will flatten out at least for a while until the wood still in the supply chain that customers have been waiting many weeks for arrives at its destination. Currently sawmills are selling lumber that will go into production in late-June, with delivery times approximately three weeks after that. 

The number of new homes for sale in April was 316,000, compared to 307,000 in March. The inventory of new homes-for-sale recovered from a big drop in March. At the current sales pace in April it would take 4.4 months to clear the supply of houses on the market, up from 3.6 months in March.

After dropping somewhat last month, the median sales price of new houses sold in April 2021 jumped significantly, to US$372,400, from $330,800 in March 2021.

New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timely barometer of the current real estate market. 

Continued price increases were outright rejected by customers, but there were enough who absolutely needed to buy that prices pushed up further. Albeit on rather low sales volumes. In the week ending May 14, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr was US$1,650 mfbm, said Madison’s Lumber Reporter. This is up by +$90, or +5%, from the previous week when it was $1,550.

Compared to the price one-year-ago, when it was US$360 mfbm, for the week ending May 14, 2021, the price of Western S-P-F KD 2×4 was up by +$1,280, or +356%.

In the week ending May 14, 2021, conversations in the Western S-P-F market among players in the US were largely dominated by Futures activity and buying hesitation caused thereby. After reaching dizzying heights which surpassed cash by a good $200, toward the close of the May contract lumber futures on the Chicago Mercantile Exchange corrected down to roughly cash levels. 

Western S-P-F producers in Canada described tangibly quieter demand, especially on Monday and Tuesday. Buyers were extremely cautious following confusing Futures board activity early in the week but there were still plenty of folks in need of wood, and certainly more than enough to keep demand well ahead of supply.

STAY AHEAD of US housing price data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices is used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.

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