Tag Archives: lumber

NRR: Lumber, log prices up. Home recovery expected to rise for next 3 years

Lumber, log prices up. Home recovery expected to rise for next 3 years


December 23, 2013

Timber Industry Report
By Rick Sohn PhD.
Umpqua Coquille LLC

Mills are competing for logs and prices are rising. This month is good for homebuyers, including a slight drop in Median Home values and a big drop in interest rates. Seven-year trend of lumber, logs, housing, and mortgage statistics are shown below.



Lumber and logs are both in nice rising price trends. Logs are climbing into a winter price range as mills compete for a limited supply to fill inventory. Economists say we are in a recovering housing market that could last another 3 years anyway. Expect to see continued strength in lumber and logs through the winter and beyond, with seasonal dips.

Building Permits were reported up to a record high level for the year, and as the media likes to say, finally recovering to the 2008 levels. That is NOT saying much. You will hear comparisons to 2008 a lot, since it was such a volatile, falling year. The 2008 high was 1.2 million permits and the low was 554,000. We will have made some real progress when housing and other stats are compared to 2007, or better yet, 2006.

The weekly average for 30-year fixed rate mortgages is bouncing around. It was at 4.57 the week of Sept 13, but dipped as low as 4.10, in the first week of November, and now is at 4.22. It is bouncing around these low levels.

At the same time, the Zillow report shows clearly that median home prices have plateau’ed and have started to dip slightly. The high for this cycle was August’s $163,000 national median. This mirrors the data for Portland from the Regional Multiple Listing Service data which also shows a home price drop, and reduced inventory of homes for sale, which fits the season. This is all very favorable for homebuyers.

In speaking with one local producer who sells into the European Clears market, recovery in that market has yet to occur. This coincides with the generally lackluster European economy, which is has worldwide impacts.

For the second month in a row, Housing Starts are not reported, due to the Government Shutdown. Data “Does not meet Production Standards.” According to the US Dept of Commerce, the results for September, October and November will be reported on Dec 18 – lets hope for a pleasant surprise.

Data reports used with permission of: 1Random Lengths. Kiln Dried 2×4-8′ PET #2/#2&Btr lumber. 2RISI, Log Lines. Douglas-fir #2 Sawmill Log, Southern Oregon region. 3 US Dept of Commerce. 4Regional Multiple Listing Service RMLSTM courtesy of Janet Johnston, Prudential Real EstateProfessionals, Roseburg, OR. Portland, Oregon data. 5Freddie Mac. National monthly average. 6Mortgage-X, national average, most recent week. 7Zillow.com, National Median Issue #6-11. © Copyright Rick Sohn, Umpqua Coquille LLC please e-mail rsohn@umpquacoquille.com

Leave a comment

Filed under lumber

August 13 Timber & log prices drop

Timber & log prices drop


September 9, 2013

Timber Industry Report
By Rick Sohn PhD.
Umpqua Coquille LLC

Interest rates increased last month, but real estate sales rose, as if homebuyers wanted to catch the bottom. Log prices dropped a lot, and lumber only somewhat, helping the mills. Seven-year trend of lumber, logs, housing, and mortgage statistics are shown below.


The price of lumber has decreased, but the price of logs has REALLY dropped. Net result? Logs are more affordable, mills are breathing a sigh of relief, and are making some money.

Fire danger has decreased in areas of the Pacific Northwest where it has been raining, This will ultimately help keep log prices down since logging operations can proceed and logs become more plentiful. Fire season still has life however, and things can change with a dry September.

According to Janet Johnson, Prudential Realty, The Roseburg Real Estate market has “exploded” with more offers being written and properties coming on the market, in the last few weeks. Judie Dunken, with the Dunken Group in Portland, is similarly positioned. RMLS reports that the Portland market has closed 10% more sales than last month, and that number for July is the best since 2005. The median home sales price in Portland is up to $280,000 and the average is $326,000. Rising interest rates, now 4.40%, have not hurt the summer home market, even though they are up over a full percentage point compared to the beginning of 2013. Many people are saying that buyers seem to be jumping in, before the interest rates rise even further.

The Portland unsold inventory remains below 3 months. The time on the market is 63 days, one month less time on the market than a year ago. Compare this to Roseburg, where there are 9.5 months of unsold inventory on the market, and an average market time of 190 days – also 30 days less time on the market than a year ago. While both markets are making significant improvements, its slower in a rural area like Roseburg than an urban area like Portland. This discrepancy leads to the following conclusions (with pockets of exceptions): there is an overall sellers market in Portland, but an overall buyer’s market in Roseburg and other rural towns.

This major difference in housing markets mirrors the economic recoveries that have occurred in rural and urban Oregon. If only rural Oregon could cut – or even salvage– more timber, rather than let it burn or get devoured by massive populations of bugs, the economies could improve.

Housing starts and building permits are showing some improvement this month, but are well short of the 1 million levels, reached in the Spring of 2013. Home prices continue to rise, albeit more slowly. According to Zillow, median home price rose the most in May, where it increased $1,300 over April, and has continued trending up with lower increases since then, as shown in the chart above.

It will be interesting to see if the gradual increases in home values and the rate of sales can continue, despite the rising interest rates. If so, there is hope that the housing starts and building permits will rise once again. This would really help the overall economy. We are still at typical deep recession levels of housing starts and building permits.

Data reports used with permission of:
1) Random Lengths. Through Sept. 2012, 2”x4”x8’ precision end trimmed hem-fir stud grade from Southern Oregon mills. Starting Oct. 2012, consolidated with Kiln Dried Studs, Coast Hem-Fir 2x4x8’ PET #2/#2&Btr. Price reported is Dollars per Thousand Board Feet, generally the third week of the month. One “board foot” of product measures 12 inches by 12 inches by one inch thick.
2) RISI, Log Lines. Douglas-fir #2 Sawmill Log, Average Region 3 Southern Oregon price, reported in Dollars per Thousand Board Feet of logs, Scribner Scale. The standardized Scribner Scale includes expected saw trim waste, so a log board foot is much more wood volume than a product board foot.
3) Dept. of Commerce, US Census Bureau. New Residential Housing Starts and New Residential Construction Permits, seasonally adjusted, annual rate. Recent reports are often revised in bold. Also, major revision made each May, reaching 2 1/2 yrs back.
4) Regional Multiple Listing Service RMLSTM data, courtesy of Janet Johnston, Prudential Real Estate Professionals Broker, Roseburg, OR. Inventory of Unsold Homes (Ratio of Active Listings to Closed Sales) in Portland, Oregon, for most recent month available.
5) Freddie Mac. Primary Mortgage Market Survey. 30-year Fixed Rate Mortgages Since 1971, national averages. Updated weekly, current report is for the prior full month.
6) Mortgage-X Most recent weekly rate of 30-year Fixed Rate Mortgages, national average.
7) Zillow.com Median value of homes sold in the United States during the month, weighted according to each area population. The Median removes the effect of outlier expensive homes, with equal numbers of homes above and below the median value each month. Revisions in bold
Issue #6-8. © Copyright Rick Sohn, Umpqua Coquille LLC.

Leave a comment

Filed under lumber