Housing ‘Zenith’
Housing starts came in at the low-end of the range for April, perhaps suggesting that what some have been keen to describe as a "bubble" is poised to float at a lower altitude going forward.
The 1.569 million annual rate for last month missed the 1.704 consensus and very nearly matched the most pessimistic estimate from five-dozen economists. The range was 1523k to 1850k. Some suggested soaring lumber prices are prompting buyers to hold off on construction.
April's 9.5% drop came on the heels
May be one aspect of the economy that cleared the bottle neck. Head and shoulders are through. Summer is moving time for those with school age kids, so let us see October.
In 2021, May 10 was the peak for lumber prices, which were $1,733 per 1,000 board feet. That was 4x higher than the 2020 price. The July, 2021 futures are currently trading at 23% off the peak, or $1,334 per 1,000 board feet.
Many homebuilders dialed back, waiting/hoping for lumber prices to fall. My understanding is that it takes over 2 years to bring a new mill online- so who knows where this ends up.
Anyone who can wait likely will. I wanted to build a deck and put up new vinyl siding but I’ve got more time than money so I’ll wait rather than pay sky high prices. Much like microchips I think this will take a year or two to actually unwind and normalize and that is of course if we are actually out of the covid woods.
Six.
I need six hammers.
1 long handled sledge, 1 short handled sledge, 1 rubber mallet, 1 heavy claw hammer, 1 light claw hammer, 1 ball-peen hammer.
I also need 3 nail guns, but that’s another story.
Isn’t it likely that more existing homes will come on the market now that a substantial portion of the population is vaccinated? Putting your house on the market and having dozens of visitors tramp through your house is a little scary in the midst of a pandemic, not to mention inviting lots of contractors to fix minor items to get the house ready for sale. I suspect many people who want to sell their homes preferred to wait until they were vaccinated. Housing prices are just about supply and demand. Our population is not exploding. Overall demand is not increasing at an extraordinary level. One can argue that there is some longer term desire for the suburbs, but housing prices are rising in downtown locations as well. One can argue that families want additional square footage so that the home can also serve as an office. But those forces for increased demand of large suburban homes can easily be satisfied by an increase in supply of existing homes for sale, which I suspect we will see very soon.
Additional supply may come in the unfortunate form of the expiration of the eviction moratorium.