Right now housing starts are up for the past three months, and after a revision of March statistics to an annual rate of 636,000, housing starts are currently at their highest level since November 2008.
Of course, it’s important to remember where we’re coming from, and in such a tough economy, a 25% year-over-year monthly gain in anything, for example, coming off two years of 30%-40% sales drops isn’t saying much—but at least things seem to be moving in the right direction toward economic recovery. (And that’s even if the new “normal” is about 30% lower than the high-water marks of production and housing starts of the past few years, as one economist says in this month’s cover article.)
Yet there are signs of genuine improvement. Even back in mid-February when I visited the West Coast and several mills and loggers in the region, word was there seemed to be an uptick in demand, with more companies gearing up to either get back to work or expand operations. One prime driver for the increased demand has been winter weather, especially in the Southeastern U.S., where log-consuming mills of all kinds have had major trouble in finding accessible timber under extremely wet conditions.
In Alabama alone, recent developments show an upturn in demand, as the state has seen three large forest products facilities now reopening. Scotch & Gulf Lumber reopened a mill in Fulton, and Coastal Forest Products reopened a plywood mill in Chapman, with plans to reopen an on-site sawmill in May. In east Alabama, Dixon Lumber is also reopening this spring. One of the common denominators for the three facilities is they had all closed as a direct result of the current economic downturn.
And there’s more: Reid Adams, president of Cofer Adams Building Supply in Lawrenceville, Ga.—at the epicenter of the Atlanta area housing market—reports on his building materials supply blog that Chicago Exchange lumber futures have reached a 32 month high. “We have probably seen the lows for the year already in SPF lumber, which has taken a huge jump, and is up over 60% from last year. . .A small increase in new home starts has severely taxed the supply chain at all levels,” Adams reported.
Now there are plenty of black clouds flying around to darken the silver linings and flatten the tender green shoots of recovery: Foreclosures remain high, and there’s a huge backlog of unsold and repossessed homes out there. Some say the bump we’re seeing is simply wholesalers and distributors, who had let inventories drop to bare shelf levels, restocking. There’s also the commercial real estate cloud. But considering where lumber producers have been, any movement toward higher prices and production is a good thing. Here’s to hoping it lasts.