By Stephen Nakrose
The Boise Cascade Co. said Monday it expects demand “to continue to fall for the remainder of 2022 and into 2023.”
The lumber company said its expectations were based on constraints in home affordability and a slowing economy that slowed the pace of new home construction.
In the third quarter of this year, overall U.S. housing starts fell 7%, driven by an 18% drop in single-family housing starts compared to the same period in 2021, Boise Cascade said.
“Demand for the products we manufacture, as well as the products we buy and distribute, is correlated with new residential construction, residential repair and remodeling, and light commercial construction,” said Boise Cascade. According to the company, consensus forecasts for US single- and multi-family housing starts are between 1.5 million and 1.6 million units for 2022, “or essentially flat compared to 2021,” it said.
Boise Cascade also said, “The Federal Reserve’s continued actions to raise interest rates to combat high inflation have raised mortgage rates significantly and created a great deal of uncertainty throughout the US economy.”
The company said “consensus forecasts for US single- and multi-family home construction in 2023 are estimated to be 15 to 20 percent below 2022 levels.”
“The aging of the US housing stock and the elevated level of equity among homeowners provide a favorable backdrop for repair and remodeling spending,” said Boise Cascade. The company also said, “While likely to be moderated by an economic slowdown, we anticipate that the key drivers of repair and remodeling activity will continue to support homeowners’ continued investment in their homes.”
“We anticipate that future commodity product prices and commodity input costs will be volatile in response to economic uncertainties, industry operating rates, transportation restrictions or disruptions, net import and export activity, inventory levels in various distribution channels, and seasonal demand patterns,” the company said said.
Write to Stephen Nakrosis at [email protected]