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US and Canada Timber and Wood Product Price and Market Report
16 – 31th May

Report from North America

 Housing starts move upward
Construction of new homes in the US rose 2.2% in April, as homebuilders continue to see strong demand from buyers. Privately‐owned housing starts in April were at a seasonally adjusted annual rate of 1.401 million. This is 2.2% above the revised March estimate of 1.371 million, but 22.3% below the April 2022 rate of 1.803 million. Single‐family housing starts in April were at a rate of 846,000; this is 1.6% above the revised March figure of 833,000.

Both single and multi-family construction rose in April. The strength in new construction comes from strong demand from would-be home buyers who don’t have many options in the resale market.

Homebuilders were most active in the Midwest and West, where housing starts rose by over 30% in both regions, but single-family construction in the West was exceptionally strong, surging by nearly 60% in April. Building permits, a key indicator of the pace of future construction, fell 1.5% to a 1.42 million rate. The decline was larger than expected.

Many homeowners don’t see an incentive to sell and face a tough housing market as 14 million mortgages were refinanced during the pandemic years and most of them were secured with an ultra-low mortgage rate. Most Americans feel frustrated by the housing market. A recent poll revealed that the number of Americans who think it’s a bad time to buy a home has hit a 45-year high.

Canadian housing starts jumped 22% in April to a seasonally adjusted annualized rate of 261,559 units. Despite the surge, the Canadian Mortgage and Housing Corporation (CMHC) noted higher costs for developers and labor shortages as significant challenges in the short term. “While both the SAAR of housing starts and the trend have returned to levels observed before the pandemic, housing starts are expected to drop significantly in 2023, before seeing some recovery in 2024 and 2025, according to our latest forecast,” said Aled ab Iorwerth, CMHC's Deputy Chief Economist.



Home sales fall again
US existing home sales fell for a second straight month in April, with prices rising in roughly half of the country, which together with higher mortgage rates could delay a housing market recovery. Existing home sales dropped 3.4% to a seasonally adjusted annual rate of 4.28 million units last month, the National Association of Realtors said. Home resales, which account for a big chunk of US housing sales, tumbled 23.2% on a year-on-year basis in April.

A persistently tight housing supply is making it difficult for prospective buyers to wade back into the market to take advantage of the current retreat in mortgage rates. Supply is unlikely to improve with many homeowners living longer in their properties, deterred by the still-high mortgage rates.

Sales fell in all four regions. Existing-home sales in the Northeast receded 1.9% from March to an annual rate of 510,000 in April, down 23.9% from April 2022. In the Midwest, existing-home sales declined 1.9% from one month ago to an annual rate of 1.02 million in April, dropping 21.5% from the prior year.

Existing-home sales in the South decreased 3.4% from March to an annual rate of 1.98 million in April, a 20.2% decline from one year ago. In the West, existing-home sales slipped 6.1% from the previous month to an annual rate of 770,000 in April, down 31.3% from the previous year.



Job market continues to outperform expectations
The April jobs report showed the US labor market remains robust, with more than a quarter million new jobs added to the economy last month as the unemployment rate fell to match its lowest level since May 1969. The US economy added 253,000 nonfarm payroll jobs last month, with the unemployment rate unexpectedly dropping to 3.4%, data from the Bureau of Labor Statistics showed.

April marks the 13th-straight month reported job gains came in higher than had been forecast by Wall Street economists.

Business services employment rose by 41,000 in April, while leisure and hospitality jobs, which have been a huge driver of much of the labor market's rebound since the pandemic, increased by 31,000. Construction and manufacturing jobs rose by 15,000 and 11,000 in April, respectively.


Consumer sentiment slumped in May
US consumers' concerns about the economy grew notably in May, coinciding with the diffusion of unfavorable economic news, especially the debt ceiling crisis. The preliminary estimates for the University of Michigan consumer sentiment index sharply dropped from 63.5 in April to 57 in May, marking a 9.1% monthly decrease and falling short of the expected 63 reading. "After two years of relative stability, long-run inflation expectations rose to their highest reading since 2011,” said Survey director Joanne Hsu.


US manufacturing sector contracts for sixth month
Economic activity in the manufacturing sector contracted in April for the sixth consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

While the April index fell below the 50% level that indicates growth, the 47.1% rating was an improvement over the March rating.

“The US manufacturing sector contracted again; however, the Manufacturing PMI improved compared to the previous month, indicating slower contraction,” said ISM Chair Tim Fiore. “The April composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period.”

Once again, the Furniture & Related Products industry and the Wood Products industry reported the largest monthly contraction among the 18 industries surveyed by ISM.



Duties on China's hardwood plywood to remain in place
The US International Trade Commission (USITC) has determined that revocation of the existing anti-dumping and countervailing duty orders on certain hardwood plywood products from China would have negative consequences. Specifically, revocation could lead to material injury to US industry. As a result of the Commission’s determination, the existing duties, many of which exceed 200%, will remain in place.

This action comes under the five-year (sunset) review process required by the Uruguay Round Agreements Act. The commission’s report will be available by June 16 on the USITC website.



LM       Loyale Merchant, a grade of log parcel  Cu.m         Cubic Metre
QS        Qualite Superieure    Koku         0.278 Cu.m or 120BF
CI          Choix Industriel                                                       FFR           French Franc
CE         Choix Economique                                                        SQ              Sawmill Quality
CS         Choix Supplimentaire      SSQ            Select Sawmill Quality
FOB      Free-on-Board     FAS            Sawnwood Grade First and
KD        Kiln Dry                               Second 
AD        Air Dry        WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through MR              Moisture Resistant
              the boards from one log are bundled                      pc         per piece      
              together                      ea                each      
BB/CC  Grade B faced and Grade C backed MBF           1000 Board Feet          
              Plywood   MDF           Medium Density Fibreboard
BF        Board Foot F.CFA         CFA Franc        
Sq.Ft     Square Foot              Price has moved up or down
Source:ITTO'  Tropical Timber Market Report