- Timber futures surged 13% Friday as the housing market finally showed signs of recovery.
- Pending home sales surged unexpectedly 2.5% in December, the biggest growth since October 2021.
- Average 30-year mortgage rates have been steadily declining from last year’s peak of 7% to 6%.
lumber prices The housing market surged 13% on Friday as it showed signs of a boom for the first time in over a year.
Timber futures jumped to $524 per 1,000 board feet, the highest since mid-October. Key building commodities are up 21% since housing market data was released earlier this week, and are up 37% year-to-date.
wood Hit through 2022, down 67% Rising mortgage rates have weighed heavily on the housing market.
of Average 30-year fixed mortgage rates have peaked Last year it was around 7%, and since then it has dropped to nearly 6%. And lower mortgage rates have pumped up the housing market, with mortgage applications up 7% last week.
in the meantime, Pending home sales jumped unexpectedly December was 2.5%, the first growth in seven months and the highest growth rate since October 2021. The median economist forecast was for a 1% decline.
Moderate recovery in housing market activity It helped boost homebuilder sentiment in January. It unexpectedly rose for the first time in a year, signaling a possible increase in housing market activity heading into the spring and summer home building seasons.
According to Domain Timber Advisors, this is very important in driving up the price of timber.
“We feel that timber prices have emerged from the recent cycle of severe volatility and returned to their long-term historical trend…We expect a near-term slowdown in housing (the main driver of timber demand). However, in our opinion, the long-term fundamentals for housing demand remain strong,” Domain’s Scott Reeves told Insider in an email.
Whether demand for housing, and therefore wood, will recover this year will be highly dependent on the development of mortgage rates. As such, the Mortgage Bankers Association forecasts that the 30-year fixed rate he will be 5.2% by 2023 and 4.4% by 2024.
While these rate forecasts remain nearly double the lows seen in early 2020, shortly after the pandemic began, home buyers who had to deal with mortgage rates as high as 7% last year would be welcomed by Serious impact on affordability for the buyer.
Finally, the National Real Estate Association Said it expects to sell existing homes It is expected to reach 4.8 million by 2023. According to the association’s forecast, this means he will fall 7% from 2022, but house prices will not fall. The NAR expects median home prices to rise 0.3% this year, compared with a nearly 10% rise in 2022.
If this projection comes true, price stability could give homebuilders more confidence in the outlook, further boosting demand for lumber and driving prices higher.