Category Archives: Finance & Economics

While North American softwood lumber consumption has declined in 2026, prices have remained surprisingly resilient due to constrained supply, reduced production, and persistent structural demand for housing despite ongoing affordability challenges. …On one hand, builders continue to face affordability concerns, elevated mortgage rates, and cautious consumers. On the other hand, lumber prices have generally strengthened throughout 2026, despite year-over-year declines in consumption. Here’s what the latest market indicators are telling us. …The U.S. housing market continues to balance between long-term demand for new homes and short-term economic pressures. …These trends suggest that, while housing demand hasn’t disappeared, the market is adapting to economic realities rather than expanding uniformly. …Although North American lumber consumption has declined year over year, production has also contracted. Reduced output across both the United States and Canada has helped keep supply relatively tight, supporting pricing across many lumber grades.

Led by declines in gasoline and diesel prices, inflation eased for the second consecutive month after reaching a three-year high in May. …Though easing inflation and a cooling labor market reduced pressure for Fed rate hikes, renewed tensions with Iran could keep inflation elevated in coming months, complicating the Fed’s path forward. On a non-seasonally adjusted basis, the Consumer Price Index (CPI) rose by 3.4% in July from a year ago, following a 3.5% increase last month, according to the BLS latest report. The “core” CPI, excluding the volatile food and energy components, increased by 2.5% over the past twelve months, following a 2.6% increase in June. The housing shelter index, which makes up a large portion of “core” CPI, rose 3.2% over the year, following a 3.3% increase last month. Meanwhile, the component index for food rose by 3.0%, and the energy component index increased by 14.7%.

Americans who act as their own builder put wood framing into 96 per cent of the houses they finished in 2025, up from 93 per cent a year earlier, in a segment where concrete held 2 per cent. That is according to the United States Census Bureau, whose Characteristics of New Housing file, published on 1 July, counts 1,005,000 single-family completions across the year compared with 1,019,000 in 2024. Owner-built houses are a slice of that market rather than the whole of it, and the framing share across every completed American house sits lower. The National Association of Home Builders put that wider figure at 94 per cent for 2024, the most recent year it has analysed, working from the same Census survey. Jing Fu, Director of Forecasting and Analysis at the National Association of Home Builders, counted 959,000 wood-framed single-family completions in 2024, 3 per cent more than the year before, with concrete taking 5 per cent of the market and steel under half a per cent.

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Yesterday, the US Department of Energy reported that crude oil stockpiles in the Special Petroleum Reserve (SPR) have fallen below 300 million barrels, equivalent to just over two weeks of supply. Today’s chart shows that since the closure of the Strait of Hormuz, the US and other IEA members have depleted some 280 million barrels of their reserves. Re-routing, SPR releases and weak demand (largely in China) have collectively absorbed most of the output loss from Hormuz. Absent these counterweights, the oil market would face a deficit of 17 million barrels a day. Instead, it faces a more manageable shortfall of 2.5 million barrels / day. …Many of these offsets are either exhausted or unsustainable. In this context, we find a 72% chance that Brent trades above current levels over the next three months. For oil to fall sustainably, a potential Iran-Oman agreement would have to last. 

The U.S. labor market weakened in July, with nonfarm payrolls down 23,000 and downward revisions cutting another 103,000 jobs from May and June. Although the unemployment rate edged lower to 4.1%, the decline reflected a smaller labor force rather than stronger hiring, as overall participation fell to its lowest level since early 2021. July marked the 7th monthly job loss over the last year and a half. Wage growth also cooled, with average hourly earnings rising 3.2% year-over-year in July to $37.62, down from 3.4% in June and the slowest pace of 2026. Despite the slowdown, wage gains continue to outpace inflation, consistent with productivity-supported real wage growth. …Employment in the overall construction sector rose by 22,000 jobs in July, following a gain of 5,000 in June. Within the industry, residential construction employment edged up by 2,100, its first monthly increase in four months, while non-residential construction added approximately 20,000 jobs.

After widespread sawmill curtailments and closures in 2025, alongside a significant reduction in imports from Canada and Europe, supply is aligning more closely with underlying demand. Sawmill operating rates have improved and prices have gradually recovered from the lows seen last year. Yet rebalancing has not made the market easier to navigate. Instead, buyers, sawmill operators and construction market participants face a new challenge: understanding how rising costs, housing weakness, trade policy and broader economic trends are influencing the market simultaneously. One of the most important distinctions in the current market is that stronger prices do not automatically mean stronger demand. The key implication: Markets can experience higher prices even when demand remains relatively subdued, particularly when supply has contracted faster than consumption. …Energy costs, housing affordability and AI-related infrastructure investment are creating new pressures across the wood products supply chain.

Re-escalation of the conflict in Iran pushed mortgage rates higher in July. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.54% in July, up 5 basis points (bps) over June. Since the conflict in the Middle East began, the 30-year mortgage rate has climbed by almost 50 bps. The average 15-year rate averaged 5.91% in July, up 9 bps from June, and up 48 basis points since the end of February. Compared to a year ago, the 30-year rate remains lower by 18 bps, however, the 15-year rate is now higher by 5 bps. The 10-year Treasury yield, a key benchmark for long-term borrowing, rose 10 bps to an average of 4.58% in July as renewed attacks in the Strait of Hormuz heightened concerns about energy supplies and inflation. The yield rose sharply, ending July at 4.67%, 23 bps above its June closing level.

Private residential construction spending declined 0.3% in June, while substantial downward revisions to improvement (remodeling) spending significantly altered the sector’s recent trajectory. …Although remodeling was the only residential category to increase in June, the gain was modest at 0.1%. When compared to a year ago, spending has declined 7.2%. …Revisions to single-family and multifamily construction spending were minor and did not alter the direction of their monthly movements. …The NAHB construction spending index illustrates how spending on single-family construction has slowed since early 2024, reflecting the impacts of elevated interest rates and ongoing uncertainty over building material tariffs. Multifamily construction spending growth has also slowed down after the peak in June 2023, with the index largely plateauing since late 2024.

JPMorganChase today announced the firm intends to deploy over $750 billion through 2035 to increase housing supply and support homeownership in the United States. This marks a nearly 40% increase in the firm’s housing capital deployment compared to the past decade, and includes financing for 1,000,000 affordable housing units and helping 500,000 homebuyers purchase homes. This announcement is part of JPMorganChase’s American Dream Initiative. …As the nation’s largest multifamily lender and residential bank mortgage lender, JPMorganChase has a track record of expanding affordable housing supply and supporting homeownership, bringing the scale and expertise needed to help address the country’s housing challenges.

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Yesterday, the US Bureau of Economic Analysis reported that US GDP growth slowed to 1.5% on an annualized basis in Q2/2026, falling short of market expectations for a 2.1% gain. Almost all of the weakness stemmed from exceptionally strong imports, which subtracted 1.5 percentage points from the headline figure. However, private spending – our preferred measure of cyclical conditions, which makes up 85% of the economy and excludes volatile government spending and trade – accelerated to a 4% annualized rate in Q2, its strongest pace in three years. As today’s chart shows, IT capex continued to rise sequentially, consumer spending recovered from a sluggish Q1, and growth broadened to residential and other business investment following several soft quarters. The latest figures validate our thesis that the US economy is poised to accelerate in 2027. After a gain of 2% this year, our baseline scenario is for GDP growth to pick up to 2.3% in 2027.

Housing’s share of the economy was 15.8% in the second quarter of 2026, according to the latest estimates of GDP produced by the Bureau of Economic Analysis. This share is down from 15.9% in the first quarter and is at the lowest level since 2019. Residential construction, measured by residential fixed investment, rose for the first time in over a year, while households’ expenditure on housing services fell due to lower household consumption of utilities. The more cyclical home building and remodeling component–residential fixed investment (RFI)–was 3.7% of GDP, even with the previous quarter. The second component, housing services, was 12.1% of GDP, down from 12.2% in the previous quarter. The graph below plots the share for housing services and RFI, along with housing’s total share of nominal GDP.

Real gross domestic product (GDP) increased at an annual rate of 1.5%  in the second quarter of 2026, according to the advance estimate released by the U.S. Bureau of Economic Analysis (BEA). In the first quarter, real GDP increased 2.1 percent. The contributors to the increase in real GDP in the second quarter were increases in consumer spending, investment, and exports that were partly offset by a decrease in government spending. Imports, which are a subtraction in the calculation of GDP, increased. Compared to the first quarter, the deceleration in real GDP in the second quarter reflected a downturn in government spending and decelerations in investment and exports that were partly offset by an acceleration in consumer spending. Imports increased more in the second quarter than in the first quarter.

The Federal Reserve held the federal funds rate at a target range of 3.5% to 3.75% at the conclusion of its July policy meeting. There were three dissenting votes, all of which supported raising the federal funds rate by 25 basis points. The July monetary policy hold marked the fifth consecutive hold, following 75 basis points of cuts at the end of 2025. The central bank noted that “economic activity is expanding at a solid pace despite elevated uncertainty.” The Fed also stated that this uncertainty is due in part to the conflict in the Middle East. Additionally, Chairman Warsh noted that the economy has shown “impressive resilience” in the face of these headline risks. …With respect to inflation, the Fed stated that “inflation remains elevated” relative to the central bank’s two percent target. Importantly, the Fed attributed these inflation challenges to “supply shocks,” including the energy sector.

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The Conference Board’s Consumer Confidence Index fell 1.4 points to 90.8 in July. Consumers’ assessment of the present situation weakened for a third consecutive month, while expectations remained subdued. The labour market component also weakened as fewer respondents described jobs as plentiful, suggesting that job security is becoming a greater concern for households. This weakening extends beyond the latest confidence survey. The employment-to-population ratio has fallen sharply this year, while the share of consumers saying jobs are hard to get remains elevated relative to recent lows. This helps explain why the unemployment rate may understate labour market softness. Participation has declined due to discouraged workers abandoning their job search, and unemployed workers who remain in the labour force are taking longer to find new employment. Beyond a steady unemployment rate, weakness in other indicators all point to a labour market that is losing momentum. 

Cambridge, Massachusetts  – Annual spending on home improvements and repairs is expected to continue losing momentum through mid-2027, according to the latest Leading Indicator of Remodeling Activity (LIRA) from the Joint Center for Housing Studies of Harvard University. Year-over-year growth in renovation and repair spending is expected to slow to just 0.5 percent in the second quarter of 2027. “Growth in remodeling permitting and retail spending on building products have flattened recently, suggesting that renovation activity is cooling,” said Rachel Bogardus Drew, Director of the Remodeling Futures Program at the Center. “Our forecast suggests this will lead to a third straight quarter of decelerating year-over-year growth, with spending projected to be $519 billion through mid-2027.” “Reduced housing starts and broader economic uncertainty are also limiting stronger gains in remodeling spending,” said Chris Herbert. “Until home sales rebound from current low levels, remodeling expenditures are likely to stay at this pace.”

June inflation data provided some relief for consumers and the bond market. Headline inflation slowed from 4.2% to 3.5% and core inflation fell back to 2.6%. While still above the Fed’s target of 2%, the progress on inflation was a result of the Iran war ceasefire. However, renewed hostilities and the end of the ceasefire are placing upward pressure on oil prices. Rising energy costs are expected to push July inflation higher. Additional pressure will come from a renewed administration effort to establish tariffs. Inflation remaining in the 3% range likely eliminates any hope for an additional Federal Reserve rate cut for 2026. And some believe the new Warsh-led Fed may increase interest rates before the end of the year. Inflation is affecting building materials as well. Residential construction input prices were 6.2% higher than a year ago, including a 4.6% increase for building materials. Given this, 2026 will be the second consecutive year of declines for single-family home building.

The average long-term U.S. mortgage rate climbed this week to its highest level in nearly 12 months, pushing up borrowing costs for prospective homebuyers at a time when rising oil prices are already squeezing household budgets. The benchmark 30-year fixed rate mortgage rate rose to 6.58% from 6.55% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.74%. The rate has ticked higher three weeks in a row. Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing power. As rates rise, that can lead prospective home shoppers to delay buying a home, one reason U.S. home sales have been sluggish this year. Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week. That average rate increased to 5.96% from 5.93% last week. A year ago, it was at 5.87%, Freddie Mac said.

Congress’ historic effort to boost the nation’s housing supply passed both chambers with overwhelming bipartisan support and became law earlier this month. It also left a mountain of paperwork for Washington’s significantly shrunken federal agencies, which are now tasked with turning dozens of new policies into reality. Some of the lawmakers who pushed for the law worry that the Department of Housing and Urban Development — which has shed more than 30% of its core policy workforce in just three years following budget cuts — is too understaffed to quickly issue new rules and implement its provisions, aimed at making building and buying homes cheaper and easier. HUD Secretary Scott Turner is “up to the task, but you’ve got to have the underlying organization to get it done,” Sen. Thom Tillis (R-N.C.) told reporters. …HUD’s budget estimates show the offices that run the department’s programs shed more than 1,800 staff since 2023.

Vinyl siding was the most used principle exterior wall material for homes started construction in 2025. This material held just over a quarter share of homes, surpassing stucco for the second time since 2018. The declining share for stucco reflected the slowdown for home building in parts of the Sun Belt. For homes started in 2025, 27.7% had vinyl siding as the principal exterior wall material. Vinyl siding was followed closely by stucco at 24.1%, and by fiber cement siding (such as Hardiplank or Hardiboard) at 22.6%. Each of these materials held about a quarter share of the market, with another sliver held by brick or brick veneer at 16.8%. Far smaller shares of single-family homes started last year had wood or wood products (5.9%) as the principal exterior wall material, while all other materials had a less than 2% share. The strongest trend has been the growing popularity in fiber cement siding.

The Conference Board Leading Economic Index® (LEI) for the US declined by 0.2% in June 2026 to 99.1 (2016=100), following a 0.1% increase in May. However, the LEI is down by only 0.3% over the first half of 2026, a much smaller rate of decline than its 1.1% contraction over the second half of 2025. …Justyna Zabinska-La Monica at The Conference Board said, “While some components of the LEI were little changed, the largest positive contribution from the yield spread, followed by marginal positive input from the remaining financial components, were not enough to offset weak consumer expectations and a drop in building permits across most of its categories. Despite the recent decline, the LEI’s six- and twelve-month growth rates, while negative, were stable. Consumer spending is weakening, but strong business investment related to AI is expected to support economic activity while inflation continues to improve.

Strong multifamily growth pushed overall housing starts higher in June, while single-family production remained sluggish as elevated mortgage rates, rising construction costs and persistent labor shortages continued to weigh on the market. Overall housing starts increased 19.0% in June to a seasonally adjusted annual rate of 1.43 million units, according to a report from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau. This pace reflects the number of housing units builders would begin over the next 12 months if June’s activity were sustained. Within the total, single-family starts decreased 0.2% to an 895,000 seasonally adjusted annual rate and were down 3.2% compared to June 2025. On a year-to-date basis, single-family starts are down 5.3%. Given recent volatility, the three-month moving average provides a clearer signal, falling to 902,000 units.

US single-family homebuilding and permits for future construction fell in June, weighed down by higher mortgage rates and inventory of unsold ‌new homes on the market. Single-family housing starts, which account for the bulk of ‌homebuilding, slipped 0.2% to a seasonally adjusted annual rate of 895,000 units. Single-family homebuilding dropped 3.2% year-on-year in June. Permits for future construction of single-family homes dropped 2.4% last month to a rate of 871,000 units. They fell 0.2% year-on-year in June. The rate on the popular 30-year fixed-mortgage has increased by nearly 60 basis points since the ‌US and Israel attacked Iran ⁠at the end of February. …Building permits for ​multi-family housing projects dropped 4.9% ‌to a rate of 445,000 units last month. Overall building permits fell 3.0% ​to a rate of 1.367 million units. They declined 2.3% year-on-year in ​June.

Economic uncertainty and persistent affordability challenges driven by rising material prices, high land costs, and elevated mortgage rates continue to weigh on builder sentiment. Builder confidence in the market for newly built single-family homes fell two points to 34 in July, down from an upwardly revised reading of 36 in June, according to the NAHB/Wells Fargo Housing Market Index (HMI). Sentiment has remained below 40 for 15 consecutive months, the longest such stretch since 2012. With the HMI below 40 for 15 straight months, affordability remains the home building industry’s primary challenge, as elevated mortgage rates, costly land, rising material prices, and persistent skilled labor shortages continue to affect the market. Looking ahead, the newly enacted 21st Century ROAD to Housing Act is a positive step that will help expand housing supply and lower overall housing costs, although more policy change is needed at the state and local level.

Residential building material prices, excluding energy, rose 0.5% in June and were up 4.6% from a year ago. Lower energy prices were apparent in June, as energy input prices fell 10.3% over the month. Meanwhile, prices for services rose 5.2% over the year, and were up 1.0% from the previous month. The Producer Price Index for final demand declined 0.3% in June, after rising 0.6% in May. Compared to a year ago, final demand prices were up 5.5%. The index for final demand services rose 0.3% in June, while the index for final demand goods fell 1.4% over the month. The price index for inputs to new residential construction fell 0.1% in June and was up 6.2% from last year. The price of goods used in new residential construction (including energy) was down 0.8% over the month and up 6.9% from last year, while the price of services was up 1.0% over the month and up 5.2% from last year. 

Inflation slowed to 3.5% in June from a three-year high last month, driven by a mid-June ceasefire agreement that stabilized oil markets and lowered energy prices. The decline in energy prices offset increases in shelter and food, resulting in a monthly decrease in inflation for the first time since April 2020. However, the relief could be short-lived as the ceasefire collapsed in early July has pushed oil prices up by 12% and renewed inflation concerns. On a non-seasonally adjusted basis, the Consumer Price Index (CPI) rose by 3.5% in June from a year ago, following a 4.2% increase last month, according to the BLS latest report. …The housing shelter index, which makes up a large portion of “core” CPI, rose 3.3% over the year, following a 3.4% increase last month. Meanwhile, the component index for food rose by 3.0%, and the energy component index increased by 15.7%.

State-level permitting activity continued to reflect a divided housing market through the first five months of 2026. Elevated mortgage rates and ongoing affordability challenges continued to weigh on single-family construction across much of the country, while multifamily permitting remained comparatively stronger, supported by gains in several regions despite continued weakness in parts of the South. Over the first five months of the year, the number of single-family permits issued nationwide reached 380,130. Compared with the same period in 2025, this represents a 6.1 percent decline compared with the May 2025 total of 404,977. In contrast, multifamily permitting activity remained stronger, with 208,192 permits issued nationwide, marking a 6.5 percent increase from the same period last year.