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Report from
North America
Housing starts rose more than expected in
February
Construction of new homes in the US rose in February
more than reversing a decline registered the previous
month according to data from the U.S. Department of
Commerce.
Housing starts increased 6.8% in February over January,
to a seasonally adjusted annual rate of 1.769 million.
Economists polled by The Wall Street Journal expected
housing starts to rise 3.8% to an annual pace of 1.70
million. Housing starts are 22.3% above the same month a
year earlier, when harsh weather across the U.S. hampered
construction activity.
Single-family housing starts surged by 5.7% to an annual
rate of 1.215 million, while multi-family housing starts
soared by 9.3% to a rate of 554,000. Single-family
homebuilding rose in the Northeast, Midwest, and South,
but fell in the West.
Residential permits, which can be a bellwether for future
home construction, fell 1.9% in February to a seasonally
adjusted annual rate of 1.859 million. The figure compares
with economists' forecasts of a 2.6% decline to an annual
pace of 1.85 million.
Housing demand remains solid but construction of homes
has been hampered for months due to material shortages
and high costs. However, an indicator compiled by the
National Association of Home Builders showed that
confidence in the single-family housing market
deteriorated in March to a six-month low.
Canadian housing starts rose 8% in February compared
with the previous month on gains in both multiple urban
starts and single detached urban starts. The seasonally
adjusted annualized rate of housing starts rose to 247,256
units in February, beating analyst expectations of 238,000
and up from a revised 229,185 units in January, Canadian
Mortgage and Housing Corporation data showed.
See:
https://www.census.gov/construction/nrc/index.html
Existing home sales tumble
Home sales fell by the most in a year in February as an
ongoing shortage of houses and double-digit price growth
continued to squeeze first-time buyers out of the market.
With mortgage interest rates rising above 4% for the first
time in nearly three years sales are likely to slow this year,
though that would do little to curb house price inflation.
Contracts to buy previously owned houses, a leading
indicator of home sales, fell for three straight months
through January.
"It will take a sharper drop in sales to bring the market
back into balance and allow prices to increase at a more
modest pace," said David Berson, chief economist at
Nationwide in Columbus, Ohio.
Existing home sales dropped 7.2% to a seasonally adjusted
annual rate of 6.02 million units last month, the largest
decrease since February 2021, the National Association of
Realtors reported. Though the decline reversed January's
jump, sales remained above their pre-pandemic level.
Economists polled by Reuters had forecast sales would
decrease to a rate of 6.10 million units. Home sales fell in
all four US regions.
Existing home resales account for the bulk of US home
sales. They dropped 2.4% on a year-on-year basis in
February.
Mortgage rates surged in February, with the 30-year fixed
rate approaching a three-year high, according to data from
mortgage finance agency Freddie Mac. It averaged 4.16%
in the week ending March 17, breaking above 4.0% for the
first time since May 2019.
Still low by historical standards, mortgage rates are set to
increase further after the Federal Reserve raised its policy
interest rate by 25 basis points, the first hike in more than
three years, and laid out an aggressive plan to push
borrowing costs to restrictive levels by 2023.
See:
https://www.nar.realtor/newsroom/existing-home-salessurge-6-7-in-january
Surprising job gains again in February
US job growth accelerated in February posting the biggest
monthly gain since July as the employment picture got
closer to its pre-pandemic strength.
Nonfarm payrolls for the month grew by 678,000 and the
unemployment rate was 3.8%, the Labor Department¡¯s
Bureau of Labor Statistics reported. That compared with
predictions of 440,000 for payrolls and 3.9% for the
jobless rate.
And, in a sign that inflation could be cooling, wages
barely rose for the month, up just 1 cent an hour, or
0.03%, compared with estimates for a 0.5% gain.
¡°This report indicates that the job market is healthy and
resilient to the ebbs and flows of the pandemic,¡± said
Daniel Zhao, senior economist for job placement site
Glassdoor. ¡°We¡¯ve seen that job gains have been over
400,000 for 10 months in a row.¡±
While leisure and hospitality led job gains, other sectors
showing strong gains included professional and business
services (95,000), Health care (64,000), construction
(60,000), transportation and warehousing (48,000) and
retail (37,000). Manufacturing contributed 36,000 and
financial activities rose 35,000.
Surging gas prices drives down consumer sentiment
Consumers in the US turned even more gloomy in March
amid the rise in gasoline prices and overall concern about
the economy¡¯s future according to the University of
Michigan¡¯s consumer sentiment index.
The index fell almost 5% to 59.7 from 62.8 in February,
with the index of future economic conditions dropping
8.4% to 54.4. That is 31.7% lower than a year ago.The
index of current economic conditions dipped slightly to
67.8.
¡°Consumer Sentiment continued to decline due to falling
inflation-adjusted incomes, recently accelerated by rising
fuel prices as a result of the Russian invasion of Ukraine,¡±
said Richard Curtin, who oversees the survey. ¡°The yearahead
expected inflation rate rose to its highest level since
1981 and expected gas prices posted their largest monthly
upward surge in decades.¡±
With gas prices topping $4 a gallon and inflation running
at an annual rate of 7.9%, the highest level in four
decades, it is no surprise that consumers are feeling
gloomy. But they have continued to spend even when
faced with higher prices. That could begin to slow and
economists have begun reducing their estimates for growth
this year while also predicting inflation will linger
throughout 2022.
See:
http://www.sca.isr.umich.edu/
and
https://www.msn.com/en-us/money/markets/surging-gas-pricesdrive-consumer-sentiment-even-lower/ar-AAUWuAO?ocid=BingNewsSearch
Manufacturing growth continued in February, except
for wood products
Economic activity in the manufacturing sector grew in
February with the overall economy achieving itsa 21st
consecutive month of growth according to the nation's
supply executives in the latest Manufacturing ISM Report
on Business.
The February Manufacturing PMI registered 58.6%, an
increase of 1% from the January reading of 57.6%. This
figure indicates expansion in the overall economy for the
21st month in a row after a contraction in April and May
2020.
"The COVID-19 omicron variant remained an impact in
February; however, there were signs of relief, with
recovery expected in March," said Timothy Fiore, chair of
the Institute for Supply Management Manufacturing
Business Survey Committee.
Of the 18 manufacturing sectors followed by ISM, 16
reported growth in February, with the Wood Products
industry being the only sector reporting a decrease
compared with January.
See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/pmi/december/
Builders call on government to end tariffs
The National Association of Home Builders (NAHB)
urged the Biden administration to increase domestic
production of softwood timber from federal lands and to
work with Canada on a new softwood lumber agreement
that will eliminate tariffs.
A discussion took place in March during a virtual White
House listening session on resolving the timber and
building material supply chain crisis.
According to a statement released by the NAHB after the
meeting, NAHB Chairman Jerry Konter told
administration officials that home building material costs
are up 20% year-over-year. And, since last August, the
price of framing lumber has more than tripled and oriented
strand board prices have doubled.
¡°These supply chain price increases have only added to the
ongoing housing affordability crisis,¡± Konter said. ¡°Few
things would have a more immediate impact on lumber
markets than a swift resolution to our ongoing trade
dispute with Canada over softwood lumber.¡±
Konter called on policymakers to do their part to help
boost domestic production by seeking higher targets for
timber sales from publicly owned lands and opening up
additional federal forest lands for logging in an
environmentally sustainable manner.
See:https://www.woodworkingnetwork.com/architecturalproducts/builders-group-tells-white-house-end-tariffs-boostproduction
and
https://nahbnow.com/2022/03/nahb-chairman-calls-for-endinglumber-tariffs-boosting-output-at-white-house-event/
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