Slow and steady. That’s the best way to describe expected, continued growth in U.S. housing starts for 2016, say experts in the wood products industry.
As has been the case for a couple of years now, wood product makers remain modestly optimistic as they track residential real estate and construction markets, the latter of which accounts for more than 80 percent of sales, including for new housing and remodeling projects, economists and industry watchers say.
Joel White, executive officer for the Spokane Home Builders Association, says “slow but upward” are the operative words for single-family housing starts.
“I am optimistic about moderate, gradual growth in Spokane County,” White says. “It’s still better than a decline.”
White says general contractors here are busy meeting the demand for multifamily units, predominantly apartment complexes, in the Spokane market.
“It’s a reflection of our market,” White says. “It’s a reflection of wages and lifestyle. For many people in Spokane County, an apartment is going to be more conducive for their budgets based on their earnings. So builders are going to construct to the market.”
He says Spokane Home Builders Association is starting to see the names of new general contractors appearing on permits for new construction.
“That’s a positive sign locally. They are either brand-new general contractors, or contractors that stopped operating for a while until demand picked up,” White says.
Shawn Church, editor of the Eugene, Ore.-based Random Lengths, says the general consensus among industry watchers is that lumber sales will “continue to improve slowly.” Random Lengths was founded in 1944 as a newsletter to provide the forest products industry with market activity and pricing reports.
“We’re looking at national housing starts to be about 1.2 million units for ’16. That’s about another 100,000 above the previous year, which is about the same above ’14,” Church says. He says that’s still below the average of 1.3 million to 1.5 million units in some years before the Great Recession.
While single-family housing starts make up the majority of the market, Church says multifamily housing starts are rapidly approaching the levels seen prior to the recession.
“Through the first three quarters of 2015, 36 percent of all starts were multifamily units, and 41 percent of permit requests were multifamily,” he says.
Church says economic uncertainties in China are having an effect on lumber prices, making prognostications about prices for next year “cloudy at best,” he says.
Potlatch Corp., of Spokane, reported third-quarter net income of $21.8 million, or 53 cents a diluted share, on revenues of $174.5 million, which was down from net income of $33.2 million, or 81 cents a diluted share, on revenues of $177.2 million in the 2014 third quarter.
“We’re encouraged by increases in lumber prices the last few weeks and continued improvement in the U.S. housing market,” Potlatch president and CEO Mike Covey said in the third-quarter report issued at the end of October. Potlatch owns approximately 1.6 million acres of timberland in Alabama, Arkansas, Idaho, Minnesota, and Mississippi.
Clearwater Paper Corp., of Spokane reported third-quarter net income of $23.1 million, or $1.21 per diluted share, up from $6.3 million, or 31 cents a diluted share, in the year-earlier quarter.
Net sales in the company’s consumer products segment was $247 million for the latest quarter, down 19 percent compared with 2014 third quarter net sales of $306 million. The decrease was due mostly to the sale of specialty mills, said president and CEO Linda K. Massman.
—Kevin Blocker