Steel Markets
Residential Housing Starts Hit by Rising Material Costs
Written by Sandy Williams
July 18, 2018
Housing starts in June dropped 12.3 percent from May to a seasonally adjusted annual rate of 1,273,000. June starts were 4.2 percent below the level in June 2017.
A plunge in multi-family housing starts led the decline, falling 20.2 percent to a rate of 304,000 for buildings with five units or more. Single-family starts were down 9.1 percent in June to 858,000.
The decline was widespread across all regions: Midwest down 35.8 percent; South down 9.1 percent; Northeast down 6.8 percent; and West down 3.6 percent.
The National Association of Home Builders blamed higher material costs for the decline in residential building.
“We have been warning the administration for months that the ongoing increases in lumber prices stemming from both the tariffs and profiteering this year are having a strong impact on builders’ ability to meet growing consumer demand,” said NAHB Chairman Randy Noel. “This is why we continue to urge senior officials to take leadership and resolve this issue.”
NAHB Senior Economist Michael Neal agreed, adding that higher lumber and material costs are “making it more difficult to build homes at competitive price points, particularly for newcomers entering the housing market.”
Building permit authorizations, a predictor of future construction, fell 2.2 percent month-over-month and 3.0 percent year-over-year to a rate of 1,273,000. Single-family authorizations were down 0.8 percent and buildings with five units or more dropped 8.7 percent.
Permit authorizations fell in all regions except the South, which posted a gain of 6.2 percent for the month. Authorizations were down double digits in the Northeast and Midwest, at 16.4 percent and 18.7 percent, respectively. Authorizations in the West fell a milder 1.8 percent.
Neal added that June’s permit report “does not suggest a significant increase in housing production in the near term. However, consumer demand for single-family housing continues to increase as the overall economy and labor market strengthen.”
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Markets
GrafTech’s Q2 loss widens in ‘challenging’ business environment
GrafTech cited a “challenging” part of the business cycle as its net loss widened in the second quarter.
CRU: Poor steel margins continue to push down raw material prices
Both iron ore and coking coal prices fell this week because of resistance from buyers. Iron ore prices have continued to fall throughout the past week, following sharp declines in steel prices in China, given no new policy announcement from the ‘Third Plenum’ meeting.
Op-Ed: The myth of the Mexican steel surge
We have heard ominous warnings about a flood of Mexican steel threatening the US market. It's the kind of rhetoric that gets thrown around often with little regard for the facts. The reality is that the Mexican steel surge is simply not happening, and the US steel industry has consistently maintained a significant trade surplus in finished products with Mexico. In 2023 alone, this surplus exceeded $3 billion.
CRU: Demand weakness continues to weigh on global sheet markets
Demand has remained persistently weak across the globe for sheet steel, weighing on prices. US HR coil prices fell the furthest this week as high-volume, low-priced deals were transacted as mills looked to fill order books and competed with one another amid relative demand weakness. Meanwhile, European prices were also down due to low demand […]
Influx of coated products fuels recent import surge
Steel imports fell back in May from April’s recent high but remained elevated compared to the levels seen over the past year. A deeper dive into the data confirms what SMU has been hearing from sources: Coated sheet is driving the recent rise in overall import levels.