A Long Way To Go

These data are following the sales of new (red) and existing (blue) homes in the United States over the past several years.

The building of new homes in the US is critical for the Williams Lake lumber industry and these data do not look good.  

First, it isn't at all clear that the sales of new homes has bottomed out, although there isn't much left to lose.  Second, the gap between the sales of new and existing homes--slightly artificial because of the differing scales, but this is how the two are normally compared--is arising because of the resale of bargain foreclosed homes.  The low value of these homes is likely to out compete new homes for some time yet.  Third, the inventory of homes for sale is still very high as builders went crazy during the past few boom years.  

Short story: Sales of all homes are way down.  Inventory of existing homes is very high.  Of those homes that do sell, foreclosed existing homes will out compete new homes for some time. Need for dimensional lumber?  Not so much.

This situation will get better but it may take a long while.  People should be thinking about long-term options.

(Warning: this advice is coming from a biologist).

For a short video, explaining just how we got into this mess, click here.

Figure credit:www.calculatedriskblog.com