Recent news reports indicate that for the first time since the second half of 2013, U.S. lumber prices are on an overall upward trend. Since the beginning of 2016 prices have increased 32%, believed to be brought on by the increase in housing starts.
In North America, wood is the material of choice for home building, and has been for generations. Homes are usually built using processed lumber derived from softwood or hardwood. In fact, analysts claim almost half of the softwood demand in the U.S. can be attributed to housing construction.
Housing starts statistics are used to measure the construction and housing industry demands in addition to the effects these demands have on the lumber market. According to sources, the number of housing starts over a given period indicate not only the strength of the economy, but lumber prices as well. In the U.S., 40% of lumber demand is for the housing and construction industries.
In September of last year, lumber prices were at a five-year low following the reduced demand from China and European buyers due to the weakening Euro and slowed economy in China. It seems that the housing market is recovering, which is very good news for the lumber industry.
Even though there is a glimmer of hope for the U.S. lumber industry, the future is still uncertain as the U.S. and Canada continue their dispute over the Softwood Lumber Agreement. While we’re currently in a grace period, October is when things will either be settled or litigated.
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