Category Archives: Finance & Economics

Wood framing continues to dominate the US single-family home construction market, according to NAHB analysis of 2024 Census Bureau data. In 2024, wood framing accounted for 94% of all completed single-family homes, reinforcing its position as the leading construction method. Concrete-framed homes represented 5% of completions, while steel-framed homes remained relatively rare, comprising less than half a percent of the market. On a count basis, approximately 959,000 wood-framed homes were completed in 2024. This was a 3% increase compared to the 2023 total. This growth also marked a rebound in market share, with wood-framed market share rising from 93% in 2023 to 94% in 2024. Steel-framed homes, while still uncommon, experienced notable growth. About 4,000 steel-framed homes were completed in 2024, representing a 33% increase from the previous year. Meanwhile, concrete-framed homes saw a decline. Their market share decreased from 7% in 2023 to 5% in 2024. On a count basis, 55,000 concrete-framed homes were completed in 2024, a 15% decrease compared to the prior year.

US lumber futures are back under pressure after a short-lived tariff-driven rally, and the reversal may be telling a broader story about the health of the housing market. Last month, futures spiked when the US announced a sharp increase in duties on Canadian softwood lumber. …What followed was a classic case of hoarding-induced overshoot: once the front-loading of demand ended, trading volumes thinned and prices quickly reversed. The first-month contract has now slumped 17.3% from its 1 August peak. …Uncertainty about how tariffs will be applied is keeping buyers cautious. At the same time, sticky to rising inflation continues to squeeze household budgets, while the timing of Federal Reserve rate cuts remains unclear. …That makes lumber’s slump more than a quirk of tariff policy—it may be the canary in the coal mine. If prices continue to lag despite a tariff regime designed to support them, it would underscore just how fragile underlying building activity really is.

Federal Reserve Chair Powell gave a mostly green light for monetary policy easing in September. Noting that inflation remains elevated, Powell stated that “the balance of risks appears to be shifting.” …The implication of this observation is that easing is in view for monetary policy given the Fed’s dual mandate of maintaining both price stability and full employment. Markets expect a cut in September. Powell detailed an important point for the housing demand, that the labor market has avoided large job losses due to policy tightening and the economy has shown “resilience.” The Fed chair also indicated that inflation pressure is now in the data from tariffs, including a rise in goods prices. …Moreover, some of the pressure from tariffs is being relaxed as trade deals are arranged and de-escalations of some trade tensions are undertaken. Canada’s drop of retaliatory trade actions against the US is a good example.

While new homes remain largely unaffordable, builder efforts to improve housing affordability paid dividends in the second quarter of 2025, according to the latest data from the NAHB/Wells Fargo Cost of Housing Index (CHI). The CHI results from the second quarter of 2025 show that a family earning the nation’s median income of $104,200 needed 36% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 71% of their earnings to pay for the same new home. …The second quarter of 2025 marked the largest historical gap where existing home prices exceeded those of new homes. …The percentage of a family’s income needed to purchase a new home was unchanged at 36% from the first to the second quarter, while the low-income CHI fell from 72% to 71% over the same period.

Economic uncertainty has clouded the pallet market outlook, as July’s job report revealed weaker-than-expected job growth. The elimination of the de minimis tariff exemption for low-value shipments is expected to improve pallet demand. Anticipated interest rate cuts will have a knock-on effect on housing affordability, stimulating the construction sector which in turn impacts lumber prices. …As pallet usage has grown, softwood has become the dominant material used in pallet manufacturing due to its abundance and cost-effectiveness. Hardwood mills were hit hard, and many saw closures, after the Chinese property market collapsed as that was its biggest end-use market. This Canadian softwood lumber supply shock does certainly leave the door open for the hardwood pallet to regain some market share. Supply and demand indicators are pointing to higher prices towards the end of 2025 and into 2026.

NAHB’s analysis indicates year-over year growth for custom home builders amid broader single-family home building weakness. The custom building market is less sensitive to the interest rate cycle than other forms of home building but is more sensitive to changes in household wealth and stock prices. With spec home building down and the stock market up, custom building is gaining market share. There were 54,000 total custom building starts during the second quarter of 2025. This was up 4% relative to the second quarter of 2024. Over the last four quarters, custom housing starts totaled 184,000 homes, just more than a 2% increase compared to the prior four quarter total (180,000).  Currently, the market share of custom home building, based on a one-year moving average, is approximately 19% of total single-family starts. This is down from a prior cycle peak of 31.5% set during the second quarter of 2009 and the 21% recent peak rate at the beginning of 2023.

Elevated mortgage rates, weak buyer traffic and ongoing supply-side challenges continued to act as a drag on builder confidence in August, as sentiment levels remain in a holding pattern at a low level. Builder confidence in the market for newly built single-family homes was 32 in August, down one point from July, according to the NAHB/Wells Fargo Housing Market Index (HMI). Builder sentiment has now been in negative territory for 16 consecutive months and has hovered at a relatively low reading between 32 and 34 since May. …In further signs of a soft housing market, the latest HMI survey also revealed that 37% of builders reported cutting prices in August down from 38% in July. This share has remained at 37% or 38% for the past three months. …The HMI index gauging current sales conditions fell one point in August to a level of 35 while the component measuring sales expectations in the next six months held steady at 43. 

Boosted by a surge in the multifamily sector, US housing starts saw a sizeable jump in July, posting the highest total of starts since February. Housing completions were also up in July, while building permits were down. According to the numbers released by the US Census Bureau on Tuesday, overall housing starts totaled 1.428 million in July, up 5.2% from June and 12.9% above July 2024. It was the highest number of overall starts since February’s 1.490 million. The sector was paced by buildings with five or more units, which had 470,000 starts in July, up from 421,000 in June. This is the highest total of multifamily starts in more than a year. Single-family housing starts were also up, coming in at 939,000 for July. This reflects a 2.8% increase month over month; however, totals are still low compared to most months over the last year. …Odeta Kushi, at First American, said the single-family housing starts numbers are concerning.

Prices for residential building materials rose again in July, marking the largest year-over-year increase in over two years. The underlying price growth trend remained the same, with service prices continuing to grow at a faster pace than goods prices. Similar to last month, parts for construction machinery and metal molding/trim experienced significant price growth, as both increased over 25% compared to last year. Prices for inputs to new residential construction—excluding capital investment, labor, and imports—rose 0.2% in July, following a 0.8% increase in June. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics.  The inputs to the new residential construction price index grew 2.8% from July of last year. The index can be broken into two components­—the goods component increased 2.4% over the year, while services increased 3.3%. 

Consumer sentiment fell back about 5% in August, declining for the first time in four months. This deterioration largely stems from rising worries about inflation. Buying conditions for durables plunged 14%, its lowest reading in a year, on the basis of high prices. Current personal finances declined modestly amid growing concerns about purchasing power. In contrast, expected personal finances inched up a touch along with a slight firming in income expectations, which remain subdued. Overall, consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused. However, consumers continue to expect both inflation and unemployment to deteriorate in the future. …Year-ahead inflation expectations rose from 4.5% last month to 4.9% this month… Long-run inflation expectations also lifted from 3.4% in July to 3.9% in August. 

Francis Palasieski

Canadian lumber duties just jumped to 35.19%. …When Canadian prices rise, US mills often raise their own prices in response. …This market behavior reduces negotiating room for dealers and tightens margins no matter where the lumber originates. …There is a prevailing trend unfolding where more architectural and engineering specifications are calling for Canadian SPF. The reason is not quality but differences in grading rules and design values. Canadian SPF and American SPFs are graded differently and are not interchangeable under many construction specifications. This means that when a project specifies Canadian SPF, dealers must supply it to meet the requirement. …The American Building Materials Alliance (ABMA) supports a negotiated resolution to the lumber dispute that addresses unfair trade practices while ensuring stable supply and predictable pricing. …Our outlook is that the current 35.19% duty rate when combined with the preference for Canadian SPF over American SPFs will keep price pressure high.

US Single-family housing permits continued a downhill trend for the sixth month in a row. The continuous decline in single-family permits highlights persistently weak housing demand, tied to affordability challenges like high mortgage rates. Builders appear cautious amid economic uncertainty, labor constraints, and rising inventories. The uptick in multi-family permits suggests a potentially stabilizing trend, though it’s important to note its volatility. The housing market’s mixed signals—weak single-family coupled with some resilience in multi-family—could mean continued drag on residential investment and the broader economy this year. Over the first six months of 2025, the total number of single-family permits issued year-to-date (YTD) nationwide reached 485,935. On a year-over-year (YoY) basis, this is a decline of 5.6% over the June 2024 level of 514,728. For multifamily, the total number of permits issued nationwide reached 244,812. This is 2.9% higher compared to the June 2024 level of 237,935.

Housing affordability remains a prominent issue, with the median home of a new home at roughly $460,000 and 70% of U.S. households unable to afford a $400,000 home. Tight inventory continues to push up prices for existing homes — which have surpassed the cost of new homes as home builders adapt to affordability challenges by building on smaller lots, constructing smaller homes and offering incentives. Even with these adaptations, though, regulations tie in heavily to the cost of new homes and account for nearly 24% of the average final new home price. Permitting and building codes play a role in these costs, as does financing and interest rates.

Real GDP growth rebounded in the second quarter, driven by a turnaround in the trade balance and stronger consumer spending. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) expanded at an annual rate of 3.0% in the second quarter of 2025, following a 0.5% contraction in the first quarter. The latest data from the GDP report suggests that inflationary pressures are easing. The GDP price index rose 2.0% for the second quarter, down from a 3.8% increase in the first quarter of 2025. The Personal Consumption Expenditures Price Index, which measures inflation (or deflation) across various consumer expenses and reflects changes in consumer behavior, rose 2.1% in the second quarter. This is down from a 3.7% increase in the first quarter of 2025. This quarter’s increase in real GDP primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and increases in consumer spending.

US mills consumed more recycled paper in 2024 compared to 2023 while exports decrease. The American Forest & Paper Association (AF&PA) recently announced its annual paper recycling rates, with 60%-64% of paper and 69%-74% of cardboard available for recovery being recycled in the United States in 2024. Paper continues to be one of the highest recycled materials in America, supported by successful recycling systems throughout the country. In 2024 alone, 46 million tons of paper was recycled in the U.S., which equates to 125,000 tons of recycled paper being turned into new, essential products like cardboard boxes, paper packaging, and toilet paper every day. …US mills used 1.29 million more tons of recycled paper to make new products in 2024 – that’s 32.7 million tons compared to 31.3 million tons in 2023.

In 2024, 73% of new single-family homes started were built on slab foundations, according to NAHB analysis of the U.S. Census Bureau’s Survey of Construction (SOC). Although this was a modest year-over-year increase of 0.6 percentage points, it continues the upward trend in slab adoption, widening the gap between slabs and other foundation types. In comparison, basements (full or partial) accounted for 17% of new homes, while crawl spaces made up just 9.2%.

US President Trump’s administration could kick off initial public offerings of Fannie Mae and Freddie Mac later this year, according to a senior administration official, marking a key milestone for the mortgage finance giants that have been under government control for years. The share sales could value Fannie and Freddie at nearly $500 billion combined, the official said. The deal would be an important turning point for the companies, which have been under federal conservatorship since 2008. The administration has been talking to banks about the potential share sale but has not formally appointed one to lead the process. Fannie and Freddie were created by Congress to support the housing market by ensuring affordable mortgage financing, but crumbled after being severely bruised during the financial crisis. …Over the years, efforts to return them to private control have continued, including under Trump’s first term, but have failed to get traction.

The impact of President Trump’s tariffs on consumer prices is just getting started, according to research by Goldman Sachs Group, adding more uncertainty to a Treasury market that has been gripped by shifting bets on the pace of interest rate cuts. US companies have so far taken the bulk of the hit but the burden will increasingly be passed on to consumers as companies hike prices, economists including Jan Hatzius wrote. Consumers in the US have absorbed an estimated 22% of tariff costs through June, but their share will rise to 67% if the latest tariffs follow the pattern of levies in previous years, they wrote. The net result: faster inflation. The core personal consumer expenditure index, one of the Federal Reserve’s favorite measures of inflation, will hit 3.2% year-on-year in December. They said underlying inflation net of tariffs would be 2.4%. The rate was 2.8% in June.

Confidence in the market increased for multifamily developers in the second quarter of 2025, according to the Multifamily Market Survey (MMS) released the NAHB. The MMS produces two separate indices. The Multifamily Production Index (MPI) was up two points year-over-year to 46. The Multifamily Occupancy Index (MOI) had a reading of 82, up one point year-over-year. Multifamily developer confidence experienced a slight increase compared to last year, most notably from the subsidized subcomponent. This is due in part to optimism surrounding the expansion of federal affordable housing resources flowing from the recent congressional reconciliation bill. However, high interest rates, rising construction costs, limited land availability and restrictive local regulations are still significant issues in certain parts of the country. 

American housing market is facing a persistent shortage. Home prices have reached historic highs and affordability has declined. Normally, in response to higher prices, housing supply would increase. However, new home construction has not kept pace with population growth and household formation. Recent research has claimed that the relationship between prices and supply has become diluted over time because of regulatory barriers and political dynamics.  A recent working paper “America’s Housing Supply Problem: the Closing of the Suburban Frontier?” by economist Edward Glaser and Joseph Gyourko, took a deep dive into why the supply of new housing has shifted lower. …This research showed that the once-strong link between increasing home prices and new home constructions has weakened or even reversed in many metro areas. …The striking finding of this new analysis is that the traditional engine of home building in the South is weakening.