Category Archives: Finance & Economics

Aggregate residential building material prices rose at their fastest pace since January 2023 in the latest Producer Price Index release from the Bureau of Labor Statistics. Input energy prices increased for the first time in over a year, while service price growth remained lower than goods. The Producer Price Index for final demand increased 0.3% in September, after falling 0.1% in August. …The price index for inputs to new residential construction rose 0.2% in September and was up 3.1% from last year. The price of goods inputs was up 0.1% over the month and 3.5% from last year, while prices for services were up 0.3% over the month and 2.5% from last year. The goods component has a larger importance to the inputs to residential construction price index, representing around 60%. On a monthly basis, the price of input goods to new residential construction was up 0.1% in September.

• Related in Woodworking Network: Construction prices have increased 3.5% since last year

The Conference Board Consumer Confidence Index® declined by 6.8 points in November to 88.7 (1985=100) from 95.5 in October. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell by 4.3 points to 126.9. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell by 8.6 points to 63.2. The Expectations Index has tracked below 80 for ten consecutive months, the threshold under which the gauge signals recession ahead. …Dana Peterson, Chief Economist, The Conference Board said, “All five components of the overall index flagged or remained weak. The Present Situation Index dipped as consumers were less sanguine about current business and labor market conditions. The labor market differential dipped again… and all three components of the Expectations Index deteriorated. Consumers were notably more pessimistic about business conditions six months from now.”

The share of new homes with decks edged down from 17.6% in 2023 to a new all-time low of 17.4% in 2024, according to NAHB tabulation of data from the HUD/Census Bureau Survey of Construction (SOC). Over the longer term, the share of new homes with decks has been declining steadily since reaching a peak of 27.0% in 2007 and 2008. Amidst that decline, the share of new homes with patios has been trending upward, from under 50% to over 60%. From the re-design of the SOC in 2005 through 2024, the correlation between the percentages of new homes with patios and decks is -0.85, indicating that patios and decks are functioning as substitutes over time—i.e., as patios become more common, they are crowding out decks. …Even so, decks remain relatively popular on new homes in some parts of the country. …Moreover, in the latest edition of What Home Buyers Really Want, 79% rated a deck as an essential or desirable feature.

WASHINGTON — Fannie Mae’s monthly economic and housing outlook, published by the Economic and Strategic Research (ESR) Group, is now available. The forecast files, which contain the ESR Group’s expectations for mortgage rates, single-family and multifamily originations, and real GDP growth, among other data points step from their November Economic Forecast and their November Housing Forecast. Highlights include: 

• Mortgage rates are expected to end 2025 at 6.6% and 2026 at 6.0%.
• Total home sales projected at 4.73 million units in 2025 and 5.08 million in 2026.
• The ESR expects home prices to rise 2.5% in 2025 and 1.3% in 2026.
• Single-family mortgage originations are forecast at $1.88 trillion in 2025 and $2.34 trillion in 2026.

Consumer sentiment was little changed this month with a 2.6 index point decrease from October that is within the margin of error. After the federal shutdown ended, sentiment lifted slightly from its mid-month reading. However, consumers remain frustrated about the persistence of high prices and weakening incomes. This month, current personal finances and buying conditions for durables both plunged more than 10%, whereas expectations for the future improved modestly. By the end of the month, sentiment for consumers with the largest stock holdings lost the gains seen at the preliminary reading. This group’s sentiment dropped about 2 index points from October, likely a consequence of the stock market declines seen over the past two weeks. Year-ahead inflation expectations inched down from 4.6% last month to 4.5% this month. This marks three consecutive months of declines, but short-run inflation expectations still remain above the 3.3% seen in January. 

Existing home sales rose to an eight-month high in October as buyers took advantage of lower mortgage rates, according to the National Association of Realtors (NAR). Resale inventory improved from a year ago but remained below pre-pandemic levels. Relatively tight supply continued to push home prices higher and challenge housing affordability. …Mortgage rates hovered between 6.5% and 7% earlier this year due to economic and tariff uncertainty. However, with the Fed resuming rate cuts in September, mortgage rates have fallen gradually. As of October 30th, the average mortgage rate decreased to 6.17%, the lowest in over a year. …Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 1.2% to a seasonally adjusted annual rate of 4.10 million in October, the highest level since February. On a year-over-year basis, sales were 1.7% higher than a year ago.

Market uncertainty exacerbated by the government shutdown along with economic uncertainty stemming from tariffs and rising construction costs kept builder confidence firmly in negative territory in November. Builder confidence in the market for newly built single-family homes rose one point to 38 in November, according to the NAHB/Wells Fargo Housing Market Index (HMI). While lower mortgage rates are a positive development for affordability conditions, many buyers remain hesitant because of the recent record-long government shutdown and concerns over job security and inflation. We continue to see demand-side weakness as a softening labor market and stretched consumer finances are contributing to a difficult sales environment. After a decline for single-family housing starts in 2025, NAHB is forecasting a slight gain in 2026 as builders continue to report future sales conditions in marginally positive territory.

The US Census Bureau announced the following value put in place construction statistics. …Construction spending during August 2025 was estimated at a seasonally adjusted annual rate of $2,169.5 billion, 0.2 percent (±0.7 percent) above the revised July estimate of $2,165.0 billion. The August figure is 1.6 percent (±1.5 percent) below the August 2024 estimate of $2,205.3 billion. During the first eight months of this year, construction spending amounted to $1,438.0 billion, 1.8 percent (±1.0 percent) below the $1,463.7 billion for the same period in 2024. …Spending on private construction was at a seasonally adjusted annual rate of $1,652.1 billion, 0.3 percent (±0.5 percent) above the revised July estimate of $1,647.5 billion. …In August, the estimated seasonally adjusted annual rate of public construction spending was $517.3 billion, virtually unchanged from (±1.2 percent) the revised July estimate of $517.5 billion. 

The Supreme Court could decide on the legality of many of the Trump administration’s tariffs within months, but the ruling won’t impact many of the administration’s levies on imported construction materials such as lumber, steel, aluminum and copper. …Many construction materials imported into the US will remain subject to hefty tariffs regardless of how the Supreme Court rules. Some homebuilding leaders warn that home prices could increase by thousands of dollars beginning next year. …Cristian deRitis, at Moody’s Analytics, said “While importers of other building materials might experience some relief, this could be temporary. The administration may choose to expand the Section 232 tariffs as a fallback strategy if the reciprocal tariffs are invalidated,” deRitis said. …There hasn’t yet been an increase in lumber prices, but NAHB Chairman Buddy Hughes forecasted that the lumber tariffs “will create additional headwinds for an already challenged housing market by further raising construction and renovation costs.”

As the nation’s housing stock ages and new homes remain out of reach for many buyers, remodeling is capturing a growing share of the residential construction market. Home renovation has become a more practical and cost-effective alternative to improve housing conditions, driving demand on the consumer side. On the supply side, more home builders are taking remodeling projects to grow their business. NAHB’s recent analysis of 25 years of Quarterly Census of Employment and Wages (QCEW) data suggests that the rise of remodelers is a sustained structural shift rather than a temporary post-pandemic surge. Over the past 25 years, the number of remodeling companies has nearly doubled, from fewer than 69,000 in 2000 to more than 128,000 in the first quarter of 2025. Remodelers now represent over half (56%) of all residential building construction companies.

Credit conditions on loans for residential Land Acquisition, Development & Construction (AD&C) were still tightening in the third quarter of 2025, according to NAHB’s quarterly survey on AD&C Financing. The net easing index derived from the survey posted a reading of -11.0 (the negative number indicating that credit tightened since the previous quarter). …More details from the Fed’s survey of lenders—including measures of demand and net easing for residential mortgages—appeared in a previous post. …More detail on credit conditions for residential builders and developers is available on NAHB’s AD&C Financing Survey web page.

International trade remains a source of volatility across the building materials sector, particularly in the softwood lumber market. …The average duty rate on Canadian softwood lumber entering the US has tripled, now hovering around 45%. These elevated trade barriers pose additional challenges for home builders who rely on Canadian lumber to meet construction demand. In 2024, Canadian softwood lumber exports to the U.S. totaled $5.1 billion, accounting for approximately 74% of the total value of softwood lumber imports. Canada remains the dominant supplier. Trade data from the U.S. Census Bureau enables tracking of import destinations at the state level. …This analysis invites the question of where Canadian softwood lumber imports are ultimately headed within the United States. In 2024, Washington state was the top destination, receiving $560.1 million worth of imports. Texas followed closely behind with $451.7 million, reflecting strong demand in the southern housing market. On the other end of the spectrum.

As the nation’s housing stock continues to age and new homes remain out of reach for many buyers, remodeling is capturing a growing share of the residential construction market, both in terms of the number of firms and employment. …Renovation has become a more practical and cost-effective alternative to improve housing conditions, driving demand on the consumer side. …NAHB’s analysis of the quarter-century of Quarterly Census of Employment and Wages data suggests that the rise of remodelers is a sustained structural shift rather than a temporary post-pandemic surge. Over the past 25 years, the number of remodeling establishments has nearly doubled—from fewer than 69,000 in 2000 to more than 128,000 in the first quarter of 2025. Remodelers now represent over half (56%) of all residential building construction (RBC) establishments. By contrast, during the mid-2000s housing boom, remodelers’ share consistently hovered around 38–39%.

An extended slowdown in sales of cardboard boxes is intensifying concern that this holiday season will be a disappointing one for US retailers. US corrugated box shipments fell to the lowest third-quarter reading since 2015, maintaining the more measured pace seen in the previous quarter, according to the Fibre Box Association. Packaging companies in recent weeks have warned that economic uncertainty is weighing on retailers and consumers. …This time of year is crucial for the box industry, with shipments typically peaking in October as retailers prepare for the holidays. Box plants said orders were flat or below normal in October, while US consumer sentiment fell to a five-month low and manufacturing activity dropped for an eighth straight month. …US box industry shipments are poised to drop 1% to 1.5% this year versus 2024,” IP’s Andy Silvernail said last week. [to access the full story a Bloomberg subscription is required]