FEA’s Paul Jannke Provides Expert Analysis and Insight into North America’s Housing and Lumber Markets in 2022

Original Source:
Canadian Forest Industries magazine: 2022 lumber markets outlook

Paul Jannke, a Principal of Forest Economic Advisors (FEA) LLC, in a feature article for Canadian Forest Industry, provides his expert analysis and insight into North American’s housing and lumber markets in 2022.

With the U.S. economy and employment growing robustly in 2021 and 2022, interest rates remaining low by historical standards, many of the supply-side constraints that held back housing over the past half-decade resolved, and high pent-up demand, Jannke says that he expects housing starts will continue to grow from an average of 1.584 million units in 2021 to 1.618 million in 2022. Strong pent-up and demographic demand would push housing starts significantly higher (likely to average 1.80-2.00 million units) were it not for some continued supply-side constraints, with labor and materials being the main ones.

Ultimately, Jannke expects lumber prices will continue to be volatile in 2022. There are a number of reasons for this, but the main one is the lingering effects of COVID-19. The lack of buying and production in the wake the first outbreak in the U.S. drove dealer stocks to historic lows. As demand surged, there was not enough inventory in the system to supply the increased consumption. This caused prices to soar to record levels. At those high prices, dealers stopped buying lumber, again driving down their stocks. Low stocks will likely force dealers to buy wood at higher prices than they want, and those high prices will cause dealers to stop buying as soon as they meet their immediate needs, which in turn will force prices sharply lower. This cycle will repeat itself over the next year, causing prices to be extremely volatile.

FEA compiles the Wood Markets News from various 3rd party sources to provide readers with the latest news impacting forest product markets. Opinions or views expressed in these articles do not necessarily represent those of FEA.