November 17, 2022
Forest Products
Housing starts moderately above consensus
Impact: Slightly positive: Housing starts were moderately above consensus expectations — The US Census Bureau released new residential construction statistics for October. Housing starts were moderately above expectations at 1,425k SAAR (vs. consensus at 1,410k SAAR), while housing permits were also slightly above expectations at 1,526k SAAR (vs. consensus at 1,514k). Single-family starts of 855k were down 6.1% m/m, while multi-family starts of 556k were down 0.5% m/m. Home builder confidence decreased for the eleventh consecutive month to 33 (five point decrease m/m) as the slowdown continues amid rising rates.
Highlights
October U.S. housing starts of 1,425k (SAAR) were moderately above consensus at 1,410k (SAAR) — Total starts were down 8.8% y/y and down 4.2% m/m from the revised September figure of 1,488k (revised up from 1,439k SAAR). For October, single-family starts were down 20.8% y/y and represented 60.0% of total starts (vs. 70.4% in 2021). The lower proportion of single-family new residential construction is significant since single-family housing starts typically consume 3x the amount of wood products vs. multi-family starts. On a regional basis, the South represented 56.7% of total starts vs. 23.6% in the West, 13.0% in the Midwest and 6.7% in the Northeast. On a y/y basis, starts were down 1.1% y/y in the South, down 19.6% y/y in the West, down 13.6% y/y in the Midwest, and down 15.8% y/y in the Northeast.
U.S. housing permits of 1,526k (SAAR) were slightly above consensus at 1,514k (SAAR) — Total permits were down 10.1% y/y and down 2.4% m/m from the unchanged September figure of 1,564k. Single- family permits of 839k were down 22.1% y/y and down 3.6% m/m, while multi-family permits of 687k were up 10.6% y/y but down 1.0% m/m. Single-family permits represented 55.0% of total permits.
U.S. housing completions were down m/m — October completions of 1,339k (SAAR) were up 6.6% y/ y but down 6.4% m/m from the revised September figure of 1,431k. Single-family completions of 961k were up 2.7% y/y but down 8.3% m/m, while multi-family completions of 362k were up 18.3% y/y but down 5.0% m/m. Single-family completions represented 71.8% of total housing completions.
Building Material sales were up slightly m/m — According to the US Census Bureau, category advance retail sales were $43.7B in October, which was up 1.1% m/m and 9.2% y/y. We highlight that October 2022 sales were 40.1% above October 2019 levels.
Canadian housing starts were above expectations — According to the CMHC, Canadian housing starts (SAAR) of 267k units in October were above FactSet consensus of 260k units. Total starts were down 10.6% m/m from September at 299k units. In urban areas, single-family starts were down 3.9% m/m, while multi-family starts were down 13.2% m/m.