February 10, 2021
As we enter 2021, housing starts are anticipated to increase around 6.3%, according to RISI projections, to 1.485 million. The single-family portion of starts has recently hit 80% of total starts while multi-family has suffered due to COVID-related issues. Low inventory of houses available for purchase and low interest rates are positive for future development, but probably won’t help home affordability going forward. These housing start numbers are something we haven’t seen since 2009, but were the average number of starts for the 20 years prior to the recession.
Federal support is coming down the pipeline as a new administration lays plans for new housing programs. The Biden Administration has recently announced plans for a $15,000 first-time home buyer tax credit while also extending the renter eviction moratorium. $25 billion in rent assistance is currently proposed. This is on top of $25 billion already approved in prior COVID relief bills.
Demand saves the day
We experienced a brief moment when new orders slowed and there was talk of a potential price correction for panel products. Lumber had taken a quick hit, the potential of winter weather was settling in, and buyers were leery of historically high prices. However, demand took over and lumber was the first indicator as it sprang back as if a correction never occurred. Plywood orders came in again and prices once again moved to higher records. We now have solid plywood orders into mid-March at historically high numbers, which is encouraging.
Veneer is as strong as plywood and continues a march to higher prices. LVL plants seek 54s and 27s that meet density grades. Plywood plants are mopping up every bit of visual grades they can get their hands on. We are seeing veneer demand from every sector whether commodity structural plywood, industrial plywood, hardwood plywood, or LVL. We are trying hard to keep our consistent customers covered with orders.
We hear supply is constrained across the wood products industry. COVID is still causing attendance disruptions and new hiring is sluggish. In the NW, mills are engaged in a balancing act of how much charred wood versus green wood can be processed without impacting residuals and production.
We intend to run as many hours as we can while orders and pricing hold up. There is ample opportunity for overtime at most of our facilities right now. If you need extra dollars in your pocket, it is time to take advantage of the opportunity.
Reminder: If you know anyone out of work and looking for a job, please send them our way!
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