Demand for wood products likely to remain steady
~December 20th, 2018
Despite fluctuations in lumber supply and pricing this year, demand for timber and forestry products and services is expected to stay consistent in 2019, some wood products industry observers say.
Joel White, executive officer of the Spokane Home Builders Association, says data compiled by Cedar City, Utah-based Construction Monitor Inc. show the number of single-family residential permits issued so far in Spokane County this year declined just over 3 percent, while multifamily permits declined over 60 percent.
“The decline in single-family permits isn’t too large,” he says. “There are still permits being pulled so we may still see those numbers go up by the end of the year.”
White says the industry took a breather on multifamily markets this year, as larger projects require more time to permit and more resources to build.
“Multifamily investors are already getting quality rents and don’t want to flood the market with too much housing,” he says. “They’ve likely slowed down for a period in order to take stock of demand.”
Looking ahead to 2019, White says he expects housing demand to remain fairly consistent.
“We might see a slowdown in construction at the end of the year,” he says. “But most indicators show interest in homebuilding will remain strong, and builders will be busy keeping up.”
Citing figures from Eugene, Ore.-based Random Lengths, a publication that tracks lumber prices and forest-products industry activity, White says the price for framing lumber started out November 2017 at $438 per 1,000 board feet and were $337 as of Dec.
“During the middle of the year, at the height of construction season, prices were up to $582,” he says. “High demand drove prices up nationally, but as the seasonal cycle dropped off, so have prices.”
Confirming those figures, Shawn Church, editor of Random Lengths, says the shift in prices was due to issues with Canadian rail car services, which caused a delay in wood shipments.
“That wood was needed at the beginning of the building season, which caused a spike in prices that reached a peak in early June,” he says. “Once the rails were moving again, wood poured into the market just as housing starts slowed, so prices have fallen to where we are now, which is average or a bit below.”
Looking ahead, Church says it’s possible wintertime rail issues will create a situation similar to last year, with an inability to get wood to market.
“Expectations aren’t as high or robust as they were last year, but it’s not necessarily all doom and gloom,” he says.
Tim Borg, general manager at the Spokane offices of Builders FirstSource, a Texas-based supplier and manufacturer of structural building products for residential new construction, says 2018 was a good year for the manufacture and sale of wood products and homebuilding in the Pacific Northwest.
Borg says he’s optimistic for the start of 2019.
“We’ve still got a pretty active market,” he says. “Next year, prices will probably climb again, but I don’t think we’ll see them rise to the same highs as last year unless demand increases significantly.”
PotlatchDeltic Corp., the Spokane-based forest-products company, reported third-quarter net income of $60.4 million, or 93 cents a diluted share, on revenues of $289.2 million, up from earnings of $33.7 million, or 82 cents a share, on revenues of $190 million in the third quarter of 2017.
Clearwater Paper Corp., of Spokane, reported third-quarter net income of $34.4 million, or $2.08 a diluted share, up from $900,000, or 5 cents a share, in the year-earlier quarter.