The beginning of the new year promises a fresh start, new goals, and the spirit of optimism. As we dive into 2023, let’s pause for a moment and review the January lumber market trends according to Belco. Here’s a snapshot of what we’re currently seeing this January as we close our 2022 and start the new year.
January Lumber Market Trends
The fact that the market is currently slow isn’t breaking news. However, the pipeline is not full like everyone thinks. In fact, there is not much wood moving through the pipeline at all. Mills are currently running lean due to log issues and shutdowns. Logs have been a major issue for the mills, leading to shutdowns. The Canadian Government have handed over the distribution logs to the first nation and they are having a rough time working the kinks out. This is also the time of year mills spend their resources building up their log decks, but that is currently on pause this year. China’s recent outbreak of the Coronavirus and consequential shutdown has also slowed down lumber production nationally.
While this slowdown has led to buying hesitancy throughout the supply chain, the truth of the matter is, there’s not a lot of product currently being produced which may lead to shortages as the market continues to pick up. So, if you’re hoping to have enough wood to cover upcoming jobs, now is the time to buy.
Here’s a quick look at the national market according to Belco. This snapshot is focused on the current territories we serve.
Knock, a lending organization, publishes a monthly Sellers-Buyers Market Index (SBMI). The SBMI is a statistical composite of days on the market, months of supply, sale price year-over-year, and the average sale to ask price ratio that provides a score per metro relative to the market conditions across the top 100 metros. A 0 rating means the market is balanced between buyers and sellers. A positive number favor sellers, while negative numbers favor buyers. The most recent YoY went from 2.11 in October 2021 to .32 in October 2022, indicating a shift from sellers to buyers.
Higher interest rates have helped calm down the competition in the Austin area, according to Ashley Jackson, incoming 2023 president of the Austin Board of Realtors. Sellers who don’t have to sell will choose not to sell, which will keep available home inventory in check, according to Kent Redding of Berkshire Hathaway HomeServices. The metro area’s unemployment rate remained steady in November at 2.8%, despite recent layoffs and fears of a recession, per the latest figures available.
Real estate sales YoY dropped nearly a third in November to just 1,177 transactions, sending inventory soaring 75% to 3,064 listings, according to the Oklahoma City Metro Association of Realtors. That’s about a two-month inventory which is still well below a balanced inventory level of about 5.5 months. The median price of a home has edged downward roughly $10K.
Colorado was visited with snowy conditions during December, which resulted in builders finishing as many homes as possible in 2022. While single-family construction dropped about 4% in December according to the US Census Bureau, the demand for new construction is still felt by builders in the Colorado area. The Colorado housing market is expected to experience an increase in pricing in 2023, but it is not anticipated to be as drastic as it was over the last two years. We’re expecting this to continue in 2023. Multifamily permits are also expected to increase in 2023.
The market in Phoenix is finally cooling off, much like some of the recent weather they’ve been having! Permits are down for single-family homes and new listings have also decreased. Overall, Arizona is currently a slow-moving market.
In California, we will most likely continue to see a slower housing market in 2023. Interest rates remain high, which keeps affordability low. According to Norada Real Estate Investments, who referenced, C.A.R.’s “2023 California Housing Market Forecast,” “Existing, single-family home sales are forecast to total 333,450 units in 2023, a decline of 7.2 percent from 2022’s projected pace of 359,220.”
In the greater Seattle area, we are seeing movement towards a more balanced market as interest rates decrease. However, when looking at all four regions in the Puget Sound, we did see minor price increases towards the end of 2022. The greater PNW may become impacted by some of the mill slowdowns in Canada.
While the start to 2023 looks slow, construction continues as the demand for housing is consistent. It is true that economic factors including inflation and high interest rates are checking the market, however, the price home buyers are willing to pay is also increasing, as recently discussed on “The Smarter Building Materials Marketing Podcast.” While the market may feel slow, it’s important to realize there isn’t a whole lot of wood in the pipeline. This might make you reconsider your current buying strategy!