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Report from
North America
US housing starts make sharp rebound on
multi-unit
surge
New US home construction rebounded sharply in
September, boosted by demand for new construction amid
a dearth of previously owned homes but the highest
mortgage interest rates in nearly 23 years could slow
momentum. Overall housing starts accelerated 7% to a rate
of 1.358 million units in September.
Single-family housing starts, which account for the bulk of
homebuilding, increased 3.2% to a seasonally adjusted
annual rate of 963,000 units last month, the US
Department of Commerce reported. Data for August was
revised to show starts at a rate of 933,000 units instead of
941,000 units as previously reported.
Starts for housing projects with five units or more soared
17.1% to a rate of 383,000 units in September. Further
gains are likely to be limited by reduced access to credit
access for builders as well as a huge stock of multi-family
housing under construction.
Confidence among single-family homebuilders
deteriorated for a third straight month in October with the
National Association of Home Builders/Wells Fargo
Housing Market Index dropping to a nine-month low.
Builders reported lower levels of buyer traffic.
Canadian new construction also climbed higher. The
monthly seasonally adjusted annual rate (SAAR) of units
started climbed 8% to 270.5k in September. Multi-unit
construction drove the growth, rising 10% to a monthly
SAAR of 207.7k units.
Single-family units lagged but still improved, rising 3% to
a monthly SAAR of 43k units. Canada’s Big Three real
estate markets are largely seeing a healthy inflow of starts.
Montreal (+98%) and Toronto (+20%) both saw
aggressive growth in September. Vancouver (-17%)
suffered a minor setback, but still remains 37% higher
than last year.
See:https://betterdwelling.com/canadian-new-housing-starts-are-rising-with-inventory-bad-news-for-prices/
US home sales fell in September
US Home sales in September fell to the lowest level in 13
years as high mortgage rates continue to hammer the
market.
Total existing-home sales, completed transactions that
include single-family homes, townhomes, condominiums
and co-ops, waned 2.0% from August to a seasonally
adjusted annual rate of 3.96 million in September the
National Association of Realtors (NAR) reported. Year-
on-year, sales dropped 15.4% (down from 4.68 million in
September 2022).
"As has been the case throughout this year, limited
inventory and low housing affordability continue to
hamper home sales," said NAR Chief Economist
Lawrence Yun. "The Federal Reserve simply cannot keep
raising interest rates in light of softening inflation and
weakening job gains."
Existing-home sales in the Northeast rose 4.2% from
August to an annual rate of 500,000 in September, down
16.7% from September 2022. In the Midwest, existing-
home sales declined by 4.1% from the previous month to
an annual rate of 930,000 in September, down 18.4% from
one year ago.
Existing-home sales in the South dipped 1.1% from
August to an annual rate of 1.82 million in September, a
decrease of 11.7% from the previous year. In the West,
existing-home sales trailed off 5.3% from the previous
month to an annual rate of 710,000 in September, down
19.3% from one year ago.
The US housing market is in a serious slowdown that is
primarily driven by high mortgage rates. High rates spook
home buyers, drying up demand, and high rates also deter
homeowners from selling since they may have to purchase
another home.
For a homeowner with a 3% mortgage rate for the next
few decades, there’s little incentive to move. In this
environment, demand for mortgages has collapsed, and
some outlets like Mortgage News Daily are quoting a rate
of 8% for a 30-year loan.
See:
https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
and
https://www.msn.com/en-us/money/realestate/us-home-sales-fell-in-september-to-the-lowest-level-since-the-great-recession/ar-AA1ivNSe
Job market continues to surprise with its strength
The US economy added an estimated 336,000 jobs in
September, greatly exceeding expectations, according to
Bureau of Labor Statistics data. It’s the largest monthly
employment increase since January and is significantly
above August’s net gain of 227,000 jobs, a total that was
revised up by 40,000 from initial estimates.
The job growth occurred across all major sectors although
there was only negligible growth in some major industries
including construction, manufacturing, and other services.
President Joe Biden touted the stronger-than-expected
report. “It’s no accident, it’s Bidenomics, we’re growing
the economy from the middle out, the bottom up and not
the top down,” Biden said during a press conference. “And
inflation’s coming down at the same time.”
While September marks the 33rd consecutive month of job
growth for the United States, the Federal Reserve has been
aiming to slow the economy and cool down the labor
market. The resiliency of the labor market has helped to
keep consumer spending strong and the economy
churning, but Fed officials have expressed concern that
rising wages could be too much of a good thing and put
upward pressure on inflation.
See:
https://edition.cnn.com/2023/10/06/economy/september-jobs-report-final/index.html
US consumer sentiment falls again on inflation worries
US consumer sentiment fell sharply in October as
households anticipated higher inflation over the next year.
The University of Michigan's preliminary reading on the
overall index of consumer sentiment came in at 63.0 this
month compared to 68.1 in September.
"Nearly all demographic groups posted setbacks in
sentiment, reflecting the continued weight of high prices,"
Joanne Hsu, the director of the University of Michigan's
Surveys of Consumers, said in a statement.
Assessments of personal finances declined about 15%,
primarily on a substantial increase in concerns over
inflation, and one-year expected business conditions
plunged about 19%. However, long-run expected business
conditions are little changed, suggesting that consumers
believe the current worsening in economic conditions will
not persist.
See:
http://www.sca.isr.umich.edu/
US manufacturing shows signs of improvement
A barometer of business conditions at American factories
contracted in September for the 11th month in a row, but
there were signs of improvement and many companies
even added workers.
The Institute for Supply Management’s manufacturing
survey rose to 49.0 last month from 47.8 in August. It was
the third straight increase and the index matched a 10-
month high.
“Companies are still managing outputs appropriately as
order softness continues, but the month-over-month
improvement in September is a clear positive,” said ISM
Chair Timothy R. Fiore.
Despite the optimism, 11 of the 18 industries surveyed by
ISM reported contraction in September, including the
Wood Products industry and Furniture & Related
Products. The Furniture & Related Products sector also
reported a decline in new orders in September.
See:https://www.marketwatch.com/story/u-s-manufacturers-show-improvement-ism-finds-but-they-still-face-tough-times-816a1425
US flooring suppliers “cautiously optimistic”
In his opening speech at the National Wood Flooring
Association (NWFA) Expo, NWFA president and CEO
Michael Martin said members are cautiously optimistic.
He reported that roughly 40% anticipate an increase in
sales this year, while another nearly 40% expect sales to
be flat and only 5% are worried about sales being down
significantly.
Still, there are concerns: most notably the economy,
supply chain challenges, an ongoing labor shortage, and
the global political climate.
See:
https://www.globalwood.org/news/2023/news_20231017.htm
Residential remodeling forecast to weaken in 2024
Annual spending for improvements and repairs to owner-
occupied homes is expected to decrease at a moderate rate
over the coming year, according to the Leading Indicator
of Remodeling Activity (LIRA) released by the
Remodeling Futures Program at the Joint Center for
Housing Studies of Harvard University. The LIRA
projects annual owner expenditures for home updates and
maintenance to decline by 7.7% through the third quarter
of 2024.
“The ongoing weakness in the housing market caused by
high interest rates and low supply of existing homes is
expected to weigh on remodeling activity next year,” says
Carlos Martín, Project Director of the Remodeling Futures
Program at the Center. “Homeowner concerns about the
health and direction of the broader economy may also
dampen plans for remodeling projects.”
“The level of annual spending on improvements and
repairs is projected to fall from US$489 billion today to
US$452 billion over the coming four quarters,” says Abbe
Will, Associate Project Director of the Remodeling
Futures Program. “While the rate of market decline should
decelerate significantly in the second part of the year,
2024 is shaping up to be a challenging year for home
remodeling.”
See:
https://www.woodworkingnetwork.com/news/woodworking-industry-news/weakening-residential-remodeling-anticipated-2024
 
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