Home building activity in North America slowed somewhat as harsh winter weather hit across the continent and supply chain issues plagued the construction industry. Long delays in materials deliveries caused problems as builders and contractors waited ever longer for wood previously ordered. Customers hesitated to make further orders because they had not yet received lumber already bought. Indeed, builders may be focussing on finishing existing projects rather than starting new ones, which could bode well for the approaching summer construction season, according to Madison’s Lumber Reporter.
Due to these delays, and to stalled projects in freezing temperatures, new home building in the US for January 2022 dropped by -4.1% from December 2021, to a seasonally adjusted annual rate of 1.638 million units. This is almost flat, just +0.8%, above the same month one year ago when it was 1.625 million. Permits for future homebuilding in January were the highest since 2006, at 1.899 units, up just +0.7% from the previous month, when it was 1.885 million. This compares to 1.883 units in January 2021.
January starts of single-family housing, the largest share of the market and construction method which uses the most wood, continued the decreases of December 2021 when it was to 1.182 million, down by another -5.6% to 1.116 million annualized. January 2022 single-family permits, however, jumped by +6.8% compared to one year ago, when it was 1.128 million units. Building permits are generally submitted two months before the home building is begun, so this is an indication of good building activity looming in March.
Shrewd investors know that construction framing softwood lumber prices are a good leading indicator for US housing activity, including home building and home sales.
Construction activity varied widely over regions; in the Northeast, housing starts rose overall, but single-family starts fell by nearly -26%. Meanwhile, in the West, both total housing starts and single-family starts increased by upwards of +15%. Starts declined overall in both the Midwest and South.
The supply of previously owned homes for sale was at record lows, indicating ongoing demand for new housing through this year.
The backlog of houses authorized for construction but not yet started continued to surpass all historical data last month, to a rate of 278,100 units, the highest on record by far. For their part, the number of one-family homes authorized for construction but not yet started climbed +5.6% to 151,000 in January, close to record levels over the past 15 years.
