B.C. manufacturers hoping for a revitalization of the U.S. housing market are going to have to wait a while longer.
On Wednesday, the U.S. Census Bureau published housing start numbers for the month of February that approached lows not seen since 2009.
According to the data, housing starts totalled 479,000 last month, which was 22.5% below the January estimate of 618,000 and 20.8% below February of 2010.
In fact, the numbers hover near record lows not seen since April of 2009 when housing starts plummeted to 477,000 units.
In B.C., low U.S. housing starts mean lumber and oriented strand board manufacturers who traditionally rely on the U.S. will likely continue to focus on developing markets in Asia.
Earlier this month, Ainsworth Lumber (TSX:ANS) president and CEO Rick Huff said he didn’t expect the U.S. housing market to recover any time soon.
“I still think there’s lots of weakness in U.S. housing markets, lots of foreclosures and those things that have to work their way through the market,” Huff told Business in Vancouver (see “Ainsworth climbs into positive territory on 2010 price spike” – BIV Business Today, March 1, 2011).
But Mark Doms, chief economist at the U.S. Department of Commerce, had a different take on the situation.
Despite February’s lows, Doms said Tuesday he expects housing activity to rise in both 2011 and 2012.
“Homes have become more affordable, thanks to lower home prices,” Doms wrote in a statement, adding that continued improvements in the labour market will also boost the housing sector.
The Blue Chip consensus, a monthly economic forecast, expects housing starts to rise 13% this year and an additional 30% in 2012, Doms noted.
He also cautioned against reading too much into February’s housing starts, explaining that this figure is one of the more volatile monthly economic indicators.
Doms said: “February’s figures may not provide a clear signal about the direction of the housing industry … Instead we’ll have to see how the housing starts and permits data evolve over the year.”