Steel Markets
Housing Permits & Starts Growth Slowed Throughout 2013
Written by Peter Wright
January 18, 2014
The most significant observation about housing permits and starts in 2013 was how the growth rate of both single and multi-family slowed progressively during the year. The three month moving average (3MMA) of the year-over-year growth rate of single family declined from 29.6 percent in March to 10.8 percent in December as multi-family declined from 51.1 percent in February to 13.7 percent in December.
The good news is that the 3MMA of total starts exceeded a million in the Q4 for the first time since the recession. The decline in the y/y growth rates is probably a result of the mortgage shock in the spring when rates rose by about 1 percent. In Q4 the growth trajectory of both single and multi-family returned to their previous levels (Figure 1). At the present rate of increase, single family could reach the one million rate around October next year.
Multi-family has already fully recovered from the recession so future growth will depend on the ratio of single to multi-family construction. Before the recession this ratio ranged between five and six single units to one multi-family unit. Today that ratio is two and showing no sign of reverting to the pre-recession level (Figure 2). The recent surge in starts was driven primarily by the South region and to a lesser extent by the West. The North East is not doing well, the Mid West declined slightly in Q4.
From April through October total permits exceeded total starts every month. In November starts surged past permits then in December they equalized. Basically the history of this ratio bodes well for housing construction as we move into 2014.
The NAHB composite sentiment index has been in the range 56 to 58 since July indicating optimism in the minds of home builders. In December sentiment ranged from 42 in the North East to 71 in the West. Any number below 50 indicates pessimism and vice versa.
Peter Wright
Read more from Peter WrightLatest in Steel Markets
Hot-rolled price hikes garner mixed reactions from the market
Several steel market sources say they were blindsided when mills increased spot prices for hot-rolled coils this week.
Steel market participants mull the impact of US/Mexico S232 negotiations
Steel market participants learned that negotiations between the US and Mexico include discussions about Section 232 tariffs on steel and aluminum despite President Trump’s June 3 proclamation increasing the tariffs from 25% to 50% for all steel and aluminum imports—except for those from the UK.
ArcelorMittal plans wire-drawing closure in Hamilton, shifts production to Montreal
ArcelorMittal’s (AM) Hamilton location to be shuttered, wire production shifting to Montreal.
Tariffs, ample domestic supply cause importers to shift or cancel HR import orders
Subdued demand is causing importers to cancel hot-rolled (HR) coil orders and renegotiate the terms of shipments currently enroute to the US, importers say. An executive for a large overseas mill said customers might find it difficult to justify making imports buys after US President Donald Trump doubled the 25% Section 232 tariff on imported steel […]
CRU Insight: A 50% S232 tariff will raise US steel prices and shift trade flows
This CRU Insight examines how the increase in Section 232 tariffs on steel to challenging levels will lead to significatively higher prices for end consumers in the US market.