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Component Manufacturing dverti$er
Don’t Forget! You Saw it in the
August 2019 #11241 Page #84
Adverti$er
Lumber Briefs By Matt Layman Publisher, Layman’s Lumber Guide
Housing’s Dilemma... No More Capacity
M
Layman's Lumber Guide ore housing dataLumber is rolling in it is not Market conclusion is that housing productivity is maxed My FORECAST & and Housing
looking good...but it is 30 days old. Therefore, out and losing its upward momentum. Component Component Manufacturer's Edition I am looking for 2-month trends.Matt Layman, Publisher manufacturers as a group are short the lumber market. Specifically, they have jobs sold out as far as three months August, 2018 • Existing Home Sales declined on rising prices, with no way of covering their lumber needs. Housing, as expanding inventory to 4.5 months...about we build it today, is peaking and our economy will surely average...not a shortage. Lumber & Housing Forecast slip into recession unless there is a disruption that gives Housing's Dilemma...No More Capacity housing a boost. I expect the short-term fix is 30-year fixed • New Home Sales increased as did prices, mortgages under I3% 40-year fixed trends. rate mortgages More housing data is rolling in and it is not looking good...but it israte 30 days old. Therefore am and looking for 2-month however the 2-month difference is still down •Existing Home Sales declined on rising prices, expanding inventoryunder to 4.5 months...about average...not a shortage. 4%. 5% Sales on sales and -10% price. •New Home increased as did in prices, however the 2-month difference is still down 5% on sales and -10% in price.
•The 2-month 15% decline in completions reduced inventory from 9 months to 6 months for the month. •Multi-family completions are down 40% for two months and multi-permits down 23% over the 60-day period. Thearenext housing bubble will be created by government • family The 2-month decline in completions •Single is steady 15% with starts, permits and completions bouncing in the +/- 2-3% range. intervention, HUD money, Fanny Mae My conclusion housing productivity is maxed and losing its upward momentum. Component manufacturersand as aFreddie group areMac reducedis,inventory from 9 months to out 6 months short the lumber market. Specifically they have jobs sold out as far guaranteed as three months with no way of covering their lumber needs. mortgages. The play is converting the unwilling month. Housing,for as the we build it today, is peaking and our economy will surely slip into recession unless there is a disruption that gives and unable renters to40-year buyers.fixed When? As soon as the 4%. money housing a boost. I expect the short term fix is 30-year fixed rate mortgages under 3% and rate mortgages under The next housing bubble will be created by government intervention, HUD economy money, Fanny Mae and Freddiestress Mac guaranteed printed begins to show in the data. When • Multi-family completions are down for mortgages. The play is converting the unwilling and40% unable renters to buyers. When? As soon as the money printed economy failgrowth. to provide inflation and GDP growth. begins to show stress in the multi-permits data. When lower interest provideinterest inflation rates and GDP two months and are downrates 23%fail to lower Under-bought dealers, treaters and component manufacturers will reload in early August. Mid month will catch buying for the over the 60-day period. jobsite September delivery surge. Under-bought dealers, treaters, and component Meanwhile, mills are being secretive about production, not disclosing intermittent down time. The autumn surprise would be a manufacturers will reload in early August. Mid-month will longer August-September rally. • lumber Singlemarket family is steady with permits, Our cycle in August will starts, see a decline in new orders from builders. They are shifting from footings and framing to catch buying for the jobsite September delivery surge. andOncompletions bouncing in CM's the +/drying in. the other hand, supply side and 2–3% dealers are under bought and exposed to the upside. Mills will catch an August fill-in buy and preparation for September. That is necessary to absorb rising production in August. August lumber prices will be range. uneven, responding to housing developments, economy, interest rates, trade wars, andmills Twitter Meanwhile, areBattles. being secretive about production,
not disclosing intermittent down time. The autumn surprise would be a longer August–September rally.
Looking Forward...ML
LUMBER MARKET CYCLE
Lumber Production With Builder Jobsite Delivery, Supply Side Inventory, & Lumber Market Cycle This happens regardless of disruptions! 1.1
0.65 0.6
0.8 0.7 0.6
0.4 0.2
0.2
JAN
FEB
0.9
1.1 1
1.1 1.0 1
0.8 0.7
1.2 1.0 1 0.7 0.6
0.8 0.7
1 0.9 0.6
0.4
0.3
MAR
1.0
APR
MAY
JUN
JLY
1 0.8 0.6 0.4
AUG
SEP
1 0.9
0.5 0.4
OCT
1
0.9 0.8 0.6 0.5
NOV
0.8 0.65 0.5 0.4
DEC
0.65 0.6 0.3 0.2 JAN
Continued next page
0.6 0.4 0.2 0
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