In July of this year, housing starts hit an adjusted annual pace of 1.17 million, up from 1.07 million just two months earlier. These numbers have continued to increase throughout the year, albeit slowly. Permits for future home construction has increased 7.4 percent to a 1.34 million housing start rate, which is the highest level since July of 2007.
The rule of thumb in the logging industry is that once the housing industry is averaging 1.3 million starts, there will be a heavy demand on timber prices. When you consider current housing start rates with the permits rate, the magic number of 1.3 million is fast approaching.
This bodes well for the timber industry, for the greater the demand, the more private landowners look to cash in their long term timber crops.
If trends continue, 4th quarter 2015 and 2016 look to be very robust for the industry that suffered alongside the construction industry during the Great Recession.