Housing units under construction peaked in July 2023 at an annualized rate of 1.7 million. That pace has eased to 1.41 million through February and looks to slow as tariffs on Canadian softwood lumber are increased in addition to other imports vital to housing construction.
About 30% of all lumber used in the building of a house is imported. The March data for housing starts will be released Thursday.
According to Bloomberg Intelligence U.S. industrial firms will have to raise prices by 9% to absorb higher import prices and building suppliers will need to raise prices between 10% and 20%.
The cost of construction is about to increase significantly, which will almost certainly result in a slower pace of housing starts and an increase in canceled housing permits.
As the new trade regime takes hold, we will be watching not only housing starts, permits and completions but also the increase in permits not started.
This overlooked metric may point to a potential tipping point in the housing market.
Cost curves associated with housing construction are rising, margins are thinning and it would logically follow that construction unemployment will increase later this year.
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