Category Archives: Finance & Economics

Mortgage rates continued to decline in February, dipping below 6% in the last week of February. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.05% last month, 5 basis points (bps) lower than January. Meanwhile, the average 15-year rate declined only a basis point to 5.43%. Compared to a year ago, the 30-year and 15-year rates are lower by 79 bps and 60 bps, respectively. The 10-year Treasury yield, a key benchmark for long-term borrowing, held relatively steady for most of February with an average 4.18% – a marginal decrease of 2 bps from the previous month. However, yields fell significantly in the final week of February. …Following the recent escalation of conflict in the Middle East, the 10-year Treasury yield has shown signs of reversing course. Investors are closely monitoring how protracted the conflict may become and its potential implications for global energy markets. If oil prices rise significantly, inflation pressures could intensify, potentially pushing Treasury yields higher.

Since the early 2010s, more than a decade of underbuilding has constrained housing supply, contributing to sustained home price growth and pushing homeownership further out of reach, particularly for younger households. One clear consequence of this structural shortage is persistently low vacancy. The homeowner vacancy rate fell to a historic low of 0.7% in the second quarter of 2023. Although it has since risen modestly to 1.2% as of the fourth quarter of 2025, it remains well below long-term norms. Rental vacancy has improved somewhat amid an influx of new multifamily supply, reaching 7.2%, which is closer to historical averages but still reflective of a relatively tight market. …In 2025, new home construction fell short of household formations, widening the U.S. housing supply gap to an estimated 4.03 million homes. Home completions declined from the prior year’s near-record pace, driven largely by a slowdown in multifamily completions. 

Kevin Mason

Last week we attended the 2026 International Builders’ Show (IBS) in Orlando, FL, and, while there was much excitement among the ~110,000 attendees around new product launches and the use of AI in homebuilding, sentiment about the current state of the US housing market seemed rather cautious. …Regarding the upcoming spring building season, most of the contacts we spoke with felt it was still a month too early to tell if we will get a noteworthy lift in demand this year (the past three years have disappointed). However, a few lamented the fact that the Fed looks set to hold rates unchanged at its upcoming meeting, and felt that a further 25bps cut would have helped boost the U.S. housing market heading into the spring. …While there may be some reasons for cautious optimism while looking at starts and new-home sales, existing-home sales disappointed in January, declining from a 12-month high of 4.27MM (adjusted) to just 3.91MM—their lowest level since September 2024. 

If enacted, the new legislation would aim to streamline tariff exclusions for goods used in home construction, help stabilize material pricing, and support efforts to expand housing supply nationwide U.S. Sens. Jacky Rosen (D‑NV) and Chris Coons (D‑DE) have introduced legislation aimed at easing construction costs and addressing America’s housing affordability crisis by excluding key homebuilding materials from tariffs imposed under the Trump administration. The Housing Tariff Exclusion Act would create a process to automatically exempt many building materials from current and future tariffs and allow importers to apply for exemptions on other essential construction inputs. The bill comes amid ongoing concerns that tariffs on imported materials such as lumber, steel, and other construction inputs have driven up costs for builders, contributing to higher home prices and exacerbating supply shortages. …The bill has garnered support from industry groups including the NAHB.

After falling below 6%, matching their lowest level in several years, mortgage rates reversed course Monday, hitting their highest point in two weeks. The average rate on the popular 30-year fixed loan rose 13 basis points to 6.12%, according to Mortgage News Daily. It had fallen to a recent low of 5.99% on Feb. 23 and pretty much sat there all week. The drop was welcome news as the all-important spring housing market gets underway. Potential buyers have been sidelined by high home prices and concerns over the broader economy. Mortgage rates crossing into the 5% range broke an emotional barrier for some, suggesting buyers might jump at the opportunity. Mortgage rates loosely follow the yield on the U.S. 10-year Treasury, which rose back above 4% on Monday. The growing conflict with Iran caused a spike in oil prices, raising inflation worries and pushing yields higher.

Residential building material prices rose at a slower rate in January, according to the latest Producer Price Index release from the Bureau of Labor Statistics. This was the first decline in the rate of price growth since April of last year.  The price index for inputs to new residential construction rose 0.7% in January and was up 3.3% from last year. The price of goods used in new residential construction was up 0.9% over the month and 2.4% from last year. Meanwhile, the price for services was up 0.3% over the month and up 4.7% from last year. …The largest year-over-year price increases continue to show in metal products. …Price declines for materials over the year are concentrated among wood products with prices for particleboard and fiberboard down 24.4%, treated wood products down 5.0%, and softwood lumber down 3.3%.

MCLEAN, Virginia — Freddie Mac released the results of its Primary Mortgage Market Survey® showing the 30-year fixed-rate mortgage averaged 5.98%. “For the first time in three and a half years, the 30-year fixed-rate mortgage dropped into the 5% range, falling even lower than last week’s milestone,” said Sam Khater, Freddie Mac’s Chief Economist. “This rate, combined with the improving availability of homes for sale, is meaningful and will drive more potential buyers into the market for spring homebuying season.” The 30-year FRM averaged 5.98% as of February 26, 2026, down from last week when it averaged 6.01%. A year ago at this time, the 30-year FRM averaged 6.76%. The 15-year FRM averaged 5.44%, up from last week when it averaged 5.35%. A year ago at this time, the 15-year FRM averaged 5.94%.

The Conference Board Consumer Confidence Index® increased by 2.2 points in February to 91.2 (1985=100), from an upwardly revised 89.0 in January. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased by 1.8 points to 120.0 in February. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—rose by 4.8 points to 72.0. The cutoff for preliminary results was February 17, 2026. “Confidence ticked up in February after falling in January, as consumers’ pessimistic expectations for the future eased somewhat,” said Dana M Peterson, Chief Economist, The Conference Board. “Four of five components of the Index firmed. Nonetheless, the measure remained well below the four-year peak achieved in November 2024 (112.8).”

US labor productivity in construction falls 30% from 1970 to 2024, while aggregate US labor productivity more than doubles over the same period, widening a long-running gap between construction and the wider economy. Since 1965, construction labor productivity falls by an average 0.6% per year, while economy-wide productivity grows about 1.6% per year, based on analysis by Goldman Sachs Global Investment Research. The analysis links part of the gap to limited innovation in construction equipment and processes after a period of faster adoption in the 1950s and 1960s. The share of industrial machines in total construction production costs rises from 4% in 1948 to 12% in 1968, then slips to 10% in the 1970s and stays near that level, while pre-fabrication’s share of new residential housing units falls from about one-third at its peak in 1960–1970 to 5%.

Following a 6-3 ruling from the Supreme Court Feb. 21 that invalidated many of the tariffs issued in the past year by the White House, the National Lumber and Building Material Dealers Association has issued a statement calling for more stability in trade policies: “Today’s decision reinforces the importance of clear statutory authority and long-term predictability in trade policy. Lumber and building material dealers operate within a supply chain that depends on stability; sudden shifts in tariff policy impose real costs on dealers, their customers, and the broader residential and commercial construction industry. Trade policy should provide certainty, not volatility. While significant trade measures remain in place, this ruling offers needed clarity and an opportunity to pursue a more durable, transparent approach that supports housing affordability and strengthens domestic supply chains. NLBMDA will continue to advocate strongly for the exemption of lumber and building materials from existing and future trade actions…

Contractors in certain niches can expect some meaningful materials price reductions after the Supreme Court struck down most of President Trump’s tariffs Friday. The court rejected Trump’s claim to authority to impose reciprocal tariffs. That would drive “a modest but meaningful reduction in materials price escalation” for specialty equipment, HVAC and electrical systems and fixtures, said Anirban Basu, chief economist at Associated Builders and Contractors. …But the administration quickly signaled plans for alternative tariff methods shortly after the ruling. AGC also noted other materials-specific tariffs on lumber, steel, aluminum and copper products are unaffected by Friday’s decision. Taken together, that means the Supreme Court decision “could be short-lived and completely counteracted,” said Basu. That back-and-forth tends to stall construction activity as owners and contractors weigh whether the decision will hold. …AGC has told builders not to hold their breath waiting for refund checks.

In related coverage:

• CNBC: Dow drops 600 points as confusion grows after Trump hikes tariffs

International Paper stands at a historic crossroads. Long considered the titan of the North American pulp and paper industry, the company is currently navigating the most aggressive structural transformation in its 128-year history. Under the relatively new leadership of CEO Andrew Silvernail, International Paper is pivoting from a broad-based fiber conglomerate into a streamlined, “pure-play” packaging leader. The company is currently in focus due to a massive strategic pivot: the geographic separation of its North American and European operations into two independent public companies. Following the complex £5.8 billion integration of DS Smith in 2025, IP is now working to unlock “conglomerate-hidden” value by splitting its assets, a move that has captured the attention of institutional investors and analysts alike. …While the billion-dollar impairment charges related to the DS Smith acquisition initially rattled the market, the underlying strategy of focusing on core North American operations while spinning off European assets appears sound.

Wednesday’s data for Housing Starts, like a few other pieces of late, catches us up on the tail end of 2025. What we see in the headline figure for November and December points to a rebound in total housing starts. ..Peering into that breakdown, we see the greater increase came in the multi-family category. And then when we look at some other data in the report, namely the number of single-family housing units under construction at the end of December and the number of housing units authorized but not started at the end of December, we see a different picture. This points to slow levels of single-family housing construction and weaker order levels, which explains the continued fall in single-family housing units not started amid the falling number of units under construction. …Meanwhile, the recent bout of severe winter weather is going to throw a wrench into housing construction in the current quarter.

Total housing starts for 2025 were 1.36 million, down 0.6% from the 1.37 million total in 2024. Single-family starts in 2025 totaled 943,000, down 6.9% from the previous year. Multifamily starts ended the year up 17.4% from 2024. “Single-family home building dipped in 2025 because of ongoing affordability challenges, fueled by high housing price-to-income ratios and elevated financing and construction costs,” said Buddy Hughes, a home builder and developer from Lexington, North Carolina. “NAHB expects single-family starts will move slightly higher this year, as mortgage rates are expected to moderate.” “Multifamily construction was down in high-density markets but up in the low-rise sector,” said Jing Fu, NAHB senior director of forecasting and analysis. “Multifamily starts are anticipated to fall 5% in 2026 to an annual pace of 392,000 units and decline an additional 6% in 2027 to a 367,000 rate, leveling off near pre-pandemic levels.”

The remodeling market is poised for growth in the coming years as many structural tailwinds, including an aging housing stock, the persistent lock-in effect and the trend for older home owners to age-in-place, will not be changing quickly, according to industry experts at a panel hosted by the National Association of Home Builders (NAHB) during the International Builders’ Show in Orlando. This positive outlook is reflected in the NAHB/Westlake Royal Remodeling Market Index (RMI). …The RMI has registered a reading above the break-even point of 50 for 24 consecutive quarters, showcasing a post-pandemic resiliency. The remodeling sector is also outpacing the single-family and multifamily housing markets when comparing their respective sentiment measurements over the past five years. …NAHB Economist Eric Lynch explained that the remodeling sector is continuing to become a larger share of the residential construction market, especially when looking at the number of firms and overall construction spending.

New residential construction in the US rose to a five-month high in December, as homebuilders boosted production to take advantage of lower borrowing costs. Housing starts increased 6.2% to an annual pace of 1.4 million homes in December, according to figures released Wednesday by the government, which were delayed by fall’s federal shutdown. …The advance was broad-based, with both single-family home starts and apartment projects rising at year’s end. The number of one-family homes started was the highest since February. The stronger construction numbers suggest that builders were growing more confident at year’s end even as they continued to sell off a bloated inventory of new houses. For the full year, however, starts notched a fourth-straight annual decline …In December, building permits, which point to future construction, rose 4.3% to an annualized pace of 1.45 million, the highest since March, government data show. Single-family permits fell slightly. [to access the full story a Bloomberg subscription is required]

Reality-television stars are rarely consulted on matters of public policy. But in April, Realtor.com asked Tarek El Moussa to comment on the White House’s “Liberation Day” tariffs. The Southern California entrepreneur, who rose to fame on the popularity of HGTV’s Flip or Fop franchise, warned that higher import taxes would harm “new-home builders” and “first-time buyers” the most — after all, “luxury buyers” could absorb greater costs. Aspiring homeowners, he averred, are “usually strapped for cash,” and “doing everything they can just to buy a house.” Now that the second Trump administration has passed its one-year anniversary, all evidence indicates that El Moussa understands his industry well. There is little doubt that his trade war erects a sizable obstacle before those looking to find a place of their own. …The types of wood available in the US are not always the same as what’s available from Canadian imports.

Builder confidence in the market for newly built single-family homes fell one point to 36 in February, according to the NAHB/Wells Fargo Housing Market Index (HMI). Persistent affordability challenges, including high housing price-to-income ratios and elevated land and construction costs, helped push builder confidence lower for the second straight month to start the year. Housing affordability remains an ongoing challenge at the start of 2026. …On the positive side, easing inflation should continue to allow lower interest rates for mortgages and builder loans. …Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility, per comments from builders in the HMI. …The HMI index gauging current sales conditions held steady at 41 from January to February, the index measuring future sales fell three points to 46 and the gauge charting traffic of prospective buyers fell two points to 22.

Housing affordability remains a critical issue, with 65% of U.S. households unable to afford a median-priced new home in 2026. When mortgage rates are elevated, even a small increase in home prices can have a big impact on housing affordability. NAHB’s latest priced out analysis shows how many households are already priced out of homeownership at the median home price and how sensitive affordability is to further price changes. At a median home price of $413,595 and a 30-year mortgage rate of 6%, roughly 88.2 million households are priced out of the market. If the median new home price goes up by just $1,000, the monthly mortgage payment increases by about $6, and the required minimum income rises by nearly $300 per year. This small change alone will price an additional 156,405 households out of the market. Rising prices are increasingly squeezing for middle-income households, not just those at the lower end of the income distribution. 

The cost of goods and services rose at a slower annual rate than expected in January, providing hope that the nagging U.S. inflation problem could be starting to ease. The consumer price index for January accelerated 2.4% from the same time a year ago, down 0.3 percentage point from the prior month, the Bureau of Labor Statistics reported Friday. That pulled the inflation rate down to where it was the month after President Donald Trump in April 2025 announced aggressive tariffs on U.S. imports. Excluding food and energy, the core CPI was up 2.5%. Economists surveyed by Dow Jones had been looking for an annual rate of 2.5% for both readings. On a monthly basis, the all-items index was up a seasonally adjusted 0.2% while core gained 0.3%. …Though the category accounted for much of the CPI gain, shelter costs rose just 0.2% for the month, bringing the annual increase down to 3%. 

The US labor market began 2026 at a surprisingly strong pace, while newly released benchmark revisions show that job growth in 2025 was considerably weaker than previously reported. Nonfarm payrolls increased by 130,000 jobs in January, and the unemployment rate edged down to 4.3%. January’s job gains were concentrated on health care, social assistance, and construction, while federal government and financial activities experienced job losses. …Excluding recession years (2008, 2009, and 2020), 2025 now stands as the weakest year of employment growth since 2003. Wage growth was unchanged in January, with average hourly earnings rising 3.7% year-over-year. This pace is 0.3 percentage points lower than a year ago. Importantly, wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

The US Bureau of Labor Statistics (BLS) reports that as of December 2025, the year-over-year increase in consumer prices and construction bid prices both stood at 2.7%. While an annual price increase below 3.0% is generally considered manageable, several factors suggest construction material costs are more concerning than they may appear. …The international oil market has been relatively stable, with gasoline prices decreasing by 10.8% in the PPI and diesel fuel costs dropping by 8.2%. Additionally, the weak new homebuilding market has eased pressure on construction materials. Softwood lumber prices declined 8.2%, while plywood and gypsum saw slight gains of 0.6% and 0.5%, respectively. Particle board and oriented strandboard (OSB) prices retreated significantly, falling 28.5%. …Two key PPI sub-indices reveal broader trends in construction material prices. The “inputs to new construction” series rose 3.5% year-over-year, while the “construction materials special index” climbed a steeper 6.2%. These figures indicate that some materials are experiencing sharp price hikes, particularly those affected by tariffs.

Lending standards for most types of residential mortgages were essentially unchanged but overall demand was weaker in the fourth quarter of 2025, according to the recent release of the Senior Loan Officer Opinion Survey (SLOOS). However, for commercial real estate (CRE) loans, lending standards for multifamily were looser, while standards for construction & development were essentially unchanged. Demand for construction & development loans was stronger, while demand for multifamily loans was essentially unchanged for the quarter. After three consecutive 25 basis point cuts to finish 2025, the Federal Reserve decided to maintain its key short-term interest rate (i.e., Federal Funds) unchanged during its first meeting of 2026. …Given the current macroeconomic landscape and a change in leadership at the Fed as Jerome Powell’s term as Chair ends in May, NAHB anticipates that any further rate cuts will occur in the latter half of this year.

The most significant challenge builders faced in 2025 was high interest rates, as reported by 84% of builders in the latest NAHB/Wells Fargo Housing Market Index survey. A smaller, albeit still significant share of 65% expect interest rates to remain a problem in 2026. The next four most serious issues builders faced in 2025 were buyers expecting prices/interest rates to decline (81%), concern about employment/economic situation (65%), the cost/availability of developed lots (63%), and negative media reports making buyers cautious (62%). Builders expect these challenges to persist with limited improvement in 2026. In addition to those top tier challenges, 54% to 61% of builders also reported facing serious problems in 2025 with cost/availability of labor (61%), rising inflation in the US economy (59%) gridlock/uncertainty in Washington (58%), impact/hook-up/inspection and other fees (57%), and local/state environmental regulations and policies (54%). Looking ahead at 2026, fewer builders expect high interest rates (65%) rising inflation in the US economy (46%) to be a significant problem.

Long-term mortgage rates continued to decline in January. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.10% last month, 9 basis points (bps) lower than December. Meanwhile, the 15-year rate declined 4 bps to 5.44%. Compared to a year ago, the 30-year rate is lower by 86 bps. The 15-year rate is also lower by 72 bps. The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.20% in January – an increase of 8 bps from the previous month, but remained considerably lower than last year by 43 bps. While mortgage rates typically move in tandem with the treasury yields, the spread between the two narrowed during the month. Reports that the Trump administration encouraged Fannie Mae and Freddie Mac to expand purchases of mortgage-backed securities (MBS) boosted demand for MBS, pushing mortgage rates lower. However, treasury yields rose sharply in the final week of January from global and fiscal pressures. 

When it comes to housing affordability, the logic of “build build build” is straightforward enough: Housing is too expensive. If there were more of it, prices would fall. …Homebuilders are even pushing a plan for a million new affordable houses. …Unfortunately, it’s not that simple. The problem of housing affordability is much bigger than insufficient supply; it’s a mismatch with demand. And that demand is driven by income inequality that has seen soaring income growth at the top and tepid growth (or even stagnation) in the middle. In other words: The way to improve housing affordability is to reduce income inequality. …What’s needed are policies that increase income for households at the bottom and middle. Rather than boosting the housing supply in the hope that they benefit, the answer is to fix the labor market to make sure that they do. 

The United States is one of the world’s largest timberland investment markets, with returns driven primarily by land values rather than timber prices, according to Domain Timber Advisors’ timberland market analysis. Timberland values remain strong at the end of 2025, supported by continued appreciation in land values, while timber prices remain relatively flat. …During 2025, Domain underwrites 14 institutional bid events, 54 public listings, and 38 off-market or non-public offerings. By the end of the fourth quarter, the acquisition pipeline consists of 46 deals covering more than 500 thousand acres, providing visibility into pricing dynamics, regional demand shifts, and emerging non-timber value drivers. …Looking ahead, Domain states that renewable energy development and technology infrastructure are expected to expand non-timber revenue opportunities in 2026 and beyond. Alternative timber product markets, including molded fiber products and biomass-to-electricity, are expected to offset part of the pulpwood demand lost due to mill closures and production quotas.

CAMBRIDGE, Massachusetts – Annual spending on improvements and maintenance to owner-occupied homes is expected to gradually slow through 2026, according to the latest Leading Indicator of Remodeling Activity (LIRA). The LIRA projects that year-over-year growth in home renovation and repair spending will be 2.9% early this year before easing to 1.6% growth by the end of the year. “Single-family home sales and permitting activity have picked up modestly from very low levels, which should support a nominal increase in remodeling activity this year,” says Rachel Bogardus Drew. “Even with some deceleration later in the year, overall annual homeowner spending on improvements is expected to reach $522 billion by the end of 2026.” “Remodeling trends closely track the health of the broader housing market,” says Chris Herbert, Managing Director of the Center.

MEMPHIS, Tennessee – International Paper announced results for the full-year and fourth quarter ended December 31, 2025. The Company separately announced its plan to create two independent, publicly traded packaging solutions companies in North America and EMEA. Full-year highlights include: Net sales of $23.63 billion; and Adjusted EBITDA (non-GAAP) from continuing operations of $2.98 billion. Q4, 2025 highlights include: Net sales of $6.01 billion, up from $3.9B in Q4 2024 prior to the DS Smith acquisition; and Loss from continuing operations of $2.36 billion, compared with a $88M net profit from continuing operations in Q4 2024. …The cuts in the Europe, Middle East and Africa business are part of IP’s ongoing optimization plan.