The highest housing starts in 13 years followed Thursday’s release of strong jobless claims numbers, Chinese industrial statistics, and the continued rally in stock index futures.
Specifically, December new home starts soared by 17% to 1.608 million, well above what analysts expected, and building permits rose by 1.416 million. Lumber prices have been on a sharp rise since July and surged to new highs Friday shortly after the data were released.
Continued low mortgage rates and strong employment drive the demand for housing and, hence, the price of 2×4 framing lumber. Copper too, used for electrical wiring, has been rising during the same six-month period.
Though many pundits, elected officials, and analysts delight at these splendid statistics, others point out that the housing starts figures were skewed by large multi-family starts indicating that fewer and fewer folks can afford to buy a home. The late morning price of random length lumber for March delivery stood at per $435 per thousand board feet.
Opinions are solely the writers’. Walt & Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, KS. They can be reached at 800-411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.