Low mortgage rates, a better jobs market, and higher consumer confidence are fueling rising home prices and quicker U.S. home sales, and leading the U.S. economic recovery.
S&P/Case-Shiller’s composite index of March home prices was up 10.9% from a year earlier, and April sales of new and existing homes rose, with median prices up 15% and 11%, respectively. U.S. crude oil production jumped 14% in 2012 to a record 8.9 million barrels a day. As someone recently said, the economy and the hardwood industry are “better than good.”
Hardwood lumber demand remains strong from all segments, and sawmills are increasing production where weather allows. However, we do not expect market growth in Q3 and Q4 to continue at the first-half pace. Cabinet sales have shown tremendous year-over-year growth, but remodeling expenditures have fallen well short of projections and residential construction growth has stalled.
There is no letup in flooring demand, as yet, but manufacturers will soon fill inventories and feel less procurement pressure. Much is riding in whether Chinese demand holds strong in Q3, as in 2012, or slows down as in 2010 and 2011. On the whole, green and KD lumber supplies will remain tight for at least another month, but production is coming in line with demand and price increases will trend towards stability.
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