Business, Contracting, Markets 42 The Mainline Many Predict Brisk Construction Demand Begins in 2024 Madisonsreport.com reported in March that 2024 expectations for new home construction will be higher than last year. Once the summer building season gets going, sawmill production should increase back to previously normal levels. Several western sawmills took temporary curtailment in January, responding to soft market conditions of 2023’s last quarter. “(New home) buyer demand remains brisk, and we expect more consumers to jump off the sidelines and into the marketplace, if mortgage rates continue to fall later this year,” said NAHB Chairman Carl Harris in March. Home sales and construction slowed during the second half of 2023, as Federal Reserve interest hikes, boosted home mortgage rates to two-decade highs, near 8% in October. With a recent down-tic in rates, improved home buying and a shortage of existing homes should spur construction and structural wood demand through 2024, according to Oxford Economics. Housing Climbs in February U.S. housing starts were at a seasonally- adjusted annual rate of 1.521 million units in February, 11% above January’s rate, and 6% over the February 2023 figure, according to the U.S. Census Bureau and HUD Dept. February’s U.S. building permits were 2% above the January report, at a seasonally-adjusted annual rate of 1.518 million units/year; a good increase of 2% over the prior year’s February 2023 permit rate. The March U.S. builder optimism rose to its highest level since last July, as reported home builder confidence for single-family home demand rose three points from the prior month, to a March score of 51, according to the National Assoc. of Home Builders (NAHB)/Wells Fargo Housing Index (HMI). The HMI survey asks builders to rate market conditions for new home sales now and the next six months. An HMI score over 50 indicates that more builders view conditions as “good.” Five Sawmill Shutdowns Hit Oregon Log Suppliers Five Oregon sawmill closures in 2024 respond to weak lumber prices, inflationary costs, unreliable public timber supplies, and increased regulation and labor burdens. However, the outlook is improving as forest product analysts anticipate sustained housing demand will lead toward future improved markets with higher lumber price indices for the remainder of this year. 1. C&D Lumber Co. on May 2 permanently closed its Riddle dimension sawmill, laying off 93 employees. C&D said closure was due to “the unprecedented challenges facing the industry today,” including low lumber prices, rising operating costs, unharvested burn areas, Private Forest Accord changes, regulation burdens, and timber shortages from public lands. C&D has been in business since 1890 and at its present location since the 1950s. Its forest management subsidiary, Silver Butte Timber Co. will continue business. 2. Prairie Wood Products indefinitely closed its Prairie City sawmill on March 1, due to federal timber supply challenges and unresolved conflicts in a timber-biomass transportation grant with the U.S. Forest Service. An idled co-generation biomass power plant is also at the site. 3. Interfor indefinitely closed its Philomath dimension sawmill complex in February. 4. Hampton Lumber closed its Banks dimension sawmill in January (had been idled a couple months). 5. Rosboro Co. closed its Springfield stud mill in January for up to two years, as it invests $100 million to upgrade its Springfield dimension mill, planers, kilns, and glue-lam beam plant. The cumulative Oregon economic impact of these closures is an estimated reduction of approximately 700–1,000 direct workers statewide, including 326 mill employee layoffs, suppliers, and contractors who are idled. Additional indirect and induced job losses will increase, annualized, as the curtailment duration prolongs. All five curtailed sawmills rely on manufacturing a component of timber harvested from state and federal forests— public sources that are increasingly unreliable, costly, and declining contributors to the regional timber supply chain. In March, the American Forest Resource Council (AFRC) urged the congressional delegation across the Northwest states to take action to address the region’s mounting public supply timber challenges. The region’s forest and wood products sector directly supports more than 150,000 private sector working families in Oregon and Washington. › AOL is a member partner of AFRC. And, we continue work together with AFRC and a coalition of allied organizations—toward our common goal of increased federal forest management and timber supply in Oregon and across the U.S. Lumber Markets In March, structural lumber price indices rose 4% during the month, and structural panel composite price also climbed. Oregon Market Spotlight Monthly Report About Wood Product Markets, Which Affect Demand for Oregon Timber Harvest ›By Rex Storm, Executive Vice President
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