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Report
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North America
US and Canada construction markets firming
The US housing market finally appears to improve. Declining prices and low interest rates have made housing ever more affordable. Housing permits in the US increased by 7.5% (seasonally adjusted rate) from February to March 2010, according to data released by the US Census Bureau and the Department of Housing and Urban Development. This is 34.1% above the number of permits in March 2009.
The improvement in the recent housing starts is still small. The seasonally adjusted rate was 626,000 in March 2010, which represents a 1.6% increase from February. Compared to the previous year, however, housing starts have gone up considerably. Builders¡¯ confidence in the market for newly built, single-family homes increased in April. The latest National Association of Home Builders/Wells Fargo Housing Market Index went up by four points from March to April 2010.
Sales of new homes increased greatly in March, up by 27% from February. It was the strongest month since July 2009 according to the Department of Commerce. The biggest increase in sales was in the South (44%) and Northeast (36%).
The significant increase in sales is at least partly linked to the homebuyer tax credit program that expires at the end of April. Nearly 1.8 million households in the US have used the credit, according to the Internal Revenue Service.
The non-residential construction sector appears to get closer to a recovery, but hardwood companies supplying this market probably will not see much growth in the near-term. The March score of the Architecture Billings Index, a leading indicator for non-residential construction and multi-family construction activity (forecast for 9-12 months), was the highest since just before the financial market meltdown in August 2008. The outlook is the most positive for multi-family construction sector and for the Midwest region in the US.
In Canada, the federal government announced new measures for government-backed mortgage insurance in February. The measures are designed to prepare homebuyers for higher interest rates and prevent a housing market bubble. While this is expected to moderate housing starts activity, Canada Mortgage and Housing Corporation forecasts growth in housing starts in nearly all provinces. The prospect of rising mortgage rates and rising home prices is driving current sales of new homes.
Lucrative prospects for remodeling activity
Homeowner improvement spending in the US is expected to grow by almost 5% in 2010. The Leading Indicator of Remodeling Activity by the Joint Center for Housing Studies at Harvard University shows that spending on remodeling will recover this year. Spending on renovation projects is expected to be US$ 106.5 billion in the second quarter of 2010 and rise to US$ 121.5 billion by autumn. Home improvement spending will benefit from the increase in home sales and in the longer-term, by the gradual recovery of the US economy.
US imports of tropical lumber, hardwood moulding and flooring
Year-to-date tropical lumber imports improved to some extent in February 2010. Especially imports of Ipe and Jatoba lumber from Brazil increased compared with the same time period in 2009. Imports of Acajou d¡¯Afrique were down by a third compared with year-to-date February 2009. Cote d¡¯Ivoire exported significantly less, but Acajou imports from Ghana increased by 80%.
US imports of hardwood moulding were almost unchanged from year-to-date February 2009 showing a decrease of 5% and valued at US$ 27.5 million. Jatoba moulding imports from Brazil were down by 14% to US$ 3.5 million, while the small volume of Jatoba mouldings coming from China increased to US$ 284,000 in value. Cumaru moulding imports from Brazil also fell by 14%, but overall Cumaru imports went up because of a significant increase in imports from Peru.
Hardwood flooring imports continued to be below 2009 levels. However, imports from Brazil increased by 37% year-to-date February from the same period in 2009. Hardwood flooring imports from Malaysia decreased by 10%, but China saw the biggest drop (-76%) in the period.
Biomass Crop Assistance Program update
The Biomass Crop Assistance Program (BCAP) is intended to promote the development of bioenergy technologies and production in the US by subsidizing the fuel supply needed to support such an industry. In BCAP¡¯s first phase, the US Department of Agriculture has paid US$ 165.3 million to eligible biomass owners for 4.18 million tons of biomass. Payments are up to US$ 45 per dry ton for eligible biomass deliveries.
While the program rules have been changed to remove woody biomass with existing markets (such as particleboard manufacturing), wood product manufacturers have been able to benefit from BCAP. Armstrong, the largest flooring manufacturer in the US, received matching payments under BCAP for shipping excess sawdust to eligible bioenergy conversion plants, according to the US Department of Agriculture.
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