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Report from
North America
Housing starts plummet to a 5-year low
Construction of new homes fell 9.8% in May as builders
pulled back amid waning demand from home buyers.
Housing starts fell to a 1.26 million annual pace from 1.39
million the previous month. The annual pace refers to how
many houses would be built over an entire year if May’s
rate of construction were to continue.
The pace of home building is down to the lowest level
since May 2020 during the peak of the COVID-19
pandemic.
New-home construction is down 4-5% from the same
period a year ago. Building permits, a sign of future
construction, also fell 2% from the previous month to a
1.39 million rate.
Builders have slowed construction of new homes primarily
due to a pullback in buyer demand. Rising inventory levels
and weak buyer demand have resulted in homes sitting
longer on the market. At the same time, “builders are
operating in a very challenging environment and it showed
up in the May construction data,” said Danielle Hale,
Chief Economist at Realtor.com.
“With tariffs raising materials costs and immigration
policy likely worsening labour shortages the supply side of
the equation is difficult and coupled with an environment
where demand for new construction homes is weakening
as the number of existing homes for sale grows,” she
added.
The pace of construction was uneven across the US. New-
home construction grew in the West by 15.1% but fell
across the rest of the nation. The sharpest fall in new home
construction was in the Northeast, which saw a 40% drop.
Housing starts across Canada came in at a seasonally
adjusted annualised rate of 279,510 units, representing a
slight decline from the month before the Canada Mortgage
and Housing Corporation reported. That was stronger than
the 255,000 residential housing projects the market was
expecting to have started for the month, according to
economists at TD Securities.
See: https://www.census.gov/construction/nrc/current/index.html
Builder confidence continues to fall
Home builder confidence in the market for newly built
single-family homes was 32 in June, down two points
from May, according to the National Association of Home
Builders (NAHB)/Wells Fargo Housing Market Index
(HMI) released in June.
The index has only posted a lower reading twice since
2012 – in December 2022 when it hit 31 and in April 2020
at the start of the pandemic when it plunged more than 40
points to 30.
“Buyers are increasingly moving to the sidelines due to
elevated mortgage rates and tariff and economic
uncertainty,” said NAHB Chairman Buddy Hughes, a
home builder and developer from Lexington, North
Carolina. “To help address affordability concerns and
bring hesitant buyers off the fence, a growing number of
builders are moving to cut prices.”
In a further sign of declining builder sentiment the use of
price incentives increased sharply in June as the housing
market continues to soften.
See: https://www.nahb.org/news-and-economics/housing-
economics/indices/housing-market-index
US employers added 139,000 jobs in May
US payroll growth slowed modestly in May as employers
added 139,000 jobs amid uncertainty on the government’s
sweeping import tariffs, federal government layoffs and
immigration crackdown. The unemployment rate held
steady at 4.2%, the US Department of Labor said.
Before the jobs report’s release economists surveyed by
Bloomberg estimated 125,000 jobs were added in May.
Job gains for March and April were revised down by a
combined 95,000, portraying a weaker labour market than
believed in late winter and early spring. March's total was
downgraded from 185,000 to 120,000 and April's from
177,000 to 147,000.
"Employment gains are moderating as many companies
remain in a holding pattern and are hesitant to hire new
workers amid heightened uncertainty about the impact of
tariff policies on economic growth," Nationwide Chief
Economist Kathy Bostjancic wrote in a note to clients. "At
the same time, they are not laying off workers in a large
way."
Last month, a sharp drop in employment in the household
survey was offset by a big decline in the labour force - the
pool of Americans working or looking for jobs - that can
be partly traced to immigration curbs.
Healthcare, a reliable job generator for the past couple of
years, again led the employment gains with 62,000.
Leisure and hospitality added 48,000 positions.
Employment showed little change over the month in other
major industries, including construction and
manufacturing.
See: https://www.bls.gov/news.release/empsit.nr0.htm
and
https://www.msn.com/en-us/money/markets/may-jobs-report-
released-employers-added-139k-jobs-unemployment-held-
steady/ar-AA1Gdfrx?ocid=BingNewsVerp
Consumer sentiment rebounds as people get over
tariff shock
US consumers in the early part of June took a considerably
less pessimistic view about the economy and potential
surges in inflation as progress appeared possible in the
global trade war, according to a University of Michigan
survey.
The closely watched Surveys of Consumers showed
across-the-board rebounds from previously dour readings,
while respondents also sharply cut back their outlook for
near-term inflation.
For the headline index of consumer sentiment, the gauge
was at 60.5, well ahead of the Dow Jones estimate for 54
and a 16% increase from a month ago.
The moves coincided with a softening in the heated
rhetoric that has surrounded President Donald Trump's
tariffs. After releasing his April 2 "liberation day"
announcement, Trump has eased off the threats and
instituted a 90-day negotiation period that appears to be
showing progress, particularly with top trade rival China.
"Consumers appear to have settled somewhat from the
shock of the extremely high tariffs announced in April and
the policy volatility seen in the weeks that followed,"
Joanne Hsu, survey director, said in a statement.
"However, consumers still perceive wide-ranging
downside risks to the economy."
See: http://www.sca.isr.umich.edu/
Manufacturing slipped further in May
Economic activity in the manufacturing sector contracted
in May for the third consecutive month, say the nation's
supply executives in the latest Manufacturing ISM Report
On Business.
The ISM manufacturing Purchasing Managers' Index
(PMI) came in at 48.5 in May, down from 48.7 in April. A
reading below 50 indicates contraction.
“In May, US manufacturing activity slipped further into
contraction after expanding only marginally in February,”
reported Susan Spence, Chair of the ISM Manufacturing
Business Survey Committee. “Contraction in most of the
indexes that measure demand and output have slowed,
while inputs have started to weaken.”
Of the 18 industry categories surveyed by ISM, seven
reported growth in May, including the Furniture & Related
Products industry. Seven industries reported contraction,
including the Wood Products industry.
See: https://www.ismworld.org/supply-management-news-and-
reports/reports/ism-report-on-business/
Cabinet sales continued down in April
Cabinet manufacturers reported a 7% monthly drop in
sales in April according to the Kitchen Cabinet
Manufacturers Association’s April Trend of Business
report. At US$195.8 million, sales were 9% lower than
that of April 2024. Custom Sales fell 8% from the
previous month while Semi-Custom Sales fell 10%. Stock
Sales rose by 8%. Through the first four months of the
year, sales were down 6% from this point last year with
the number of units sold down 156%.
See: https://www.kcma.org/insights
North American plywood market expected to grow at 5-
6% through 2033
The business research and consulting firm Market Data
Forecast projects that the North America plywood market
will grow at a compound annual growth rate (CAGR) of
5.62% from 2025 to 2033 and be worth US$34.22 billion
by 2033 from US$22.10 billion in 2025. The market was
worth US$20.92 billion in 2024. The Market Data
Forecast report cited market opportunities in the areas of
prefabricated and modular construction and in the
development and adoption of high-performance plywood
variants.
See: https://www.marketdataforecast.com/about-us
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