Forecasting housing starts has been elusive, but it is critically important as new residential construction represents one of the largest consumption segments for lumber and panels
January 20, 2016 — Vancouver, BC
The US Census Bureau & the Department of Housing & Urban Development released its December and total 2015 statistics on new residential starts in the U.S. (see below). There were no real surprises with the data, but predicting U.S. housing starts has been virtually impossible for analysts and economists.
WOOD MARKETS has conducted its own U.S. housing forecasts since 2007 when about that time, consensus forecasts became wildly inaccurate. Since then, WOOD MARKETS has repeatedly highlighted that a structural change has been occurring in the U.S. housing market and the use of traditional economic models will not work until much later in the cycle. As a result, WOOD MARKETS own housing forecasts have been decidedly more conservative as compared to all other economists’ forecasts. Since 2007, our housing and supply/demand forecasts have been much closer to the actual results as compared to the many dozens of professional economists and modelers.
Here are the WOOD MARKETS’ forecasts for the last two 1-year periods vs. Actuals & the “Consensus”:
Note: * Census Bureau & Department of Housing & Urban Development
** WOOD MARKETS 2015 – 5-Year Outlook (Dec 2014)
** WOOD MARKETS 2014 – 5-Year Outlook (Dec 2013)
The key take-away message is this: The Consensus forecasts continue to be too high – with some being way off the charts! For those that use housing forecasts in their business plans, using the consensus forecasts in 2014 of 770,000 single family housing starts would have resulted in forecasts of almost 2 billion board feet of extra lumber demand. This type of forecasted demand increase would have suggested a much tighter supply and demand balance, where higher lumber price forecasts could be another one of the wrong predictions.
And WOOD MARKETS’ U.S. housing forecast for 2016 (in WOOD MARKETS 2016) is once again lower than the Consensus forecast – no surprise here! And our consultants have a decidedly conservative tone to North America and Chinese demand as well as prices for 2016 – all predicted before any signs of the current global economic volatility started!
Those subscribers who have used WOOD MARKETS’ 5-year forecasts over the years have obtained more accurate forecasts in terms of: housing starts; lumber, OSB and plywood production; exports (due to our international project work); price forecasts; and other trends. Contact WOOD MARKETS’ consultants today and start making better strategic and business decisions based on a proven perspective that continues to be more grounded and accurate than the arm-chair economist!
Full details of the five-year outlook for the U.S. and Canada’s lumber and panels (OSB, plywood, MDF and particleboard) consumption, imports, exports, production and price trends are available in WOOD Markets 2016: The Solid Wood Products Outlook – 2016 to 2020 (released in mid-December, 2015). Visit https://www.woodmarkets.com/publication/5-year-outlook/
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