According to the US Federal Housing Finance Agency’s (FHFA) most recent House Price Index (HPI), released May 25, US house prices rose in 1Q 2020, up +1.7% from 1Q 2019 and up +5.7% from one year ago.
Elsewhere, according to the CoreLogic Home Price Index Report, delivered June 9, national home prices saw a year-over-year increase of +5.4% in May — up from a +3.6% gain in April 2019. CoreLogic attributes the growth to a decrease in housing supply due to the pandemic.

US Median House Prices 1Q 2020 & Benchmark Softwood Lumber Prices June 2020

WSPF-SYP-ESPF-2x4 Softwood Lumber Prices-2year-US-Median-House-Prices

“Tight supply and pent-up demand, particularly among millennials, provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term.

Frank Nothaft, CoreLogic’s chief economist.

However, the report predicts the economic fallout caused by the virus will cause a reversal of sorts in the months to come. The CoreLogic report followed a similar Bank of America forecast, from early April.

US Housing Total Starts April 2020 & Benchmark Softwood Lumber Prices June 2020

WSPF-SYP-ESPF-2x4 Softwood Lumber Prices-2year-TOTAL-US Housing STARTS

Home price growth in April and May is still expected to show a 12-month increase of more than +4%, while the national forecast through March 2021 suggests deceleration of price growth to +0.5%, but no significant decline.

US Housing 1-Unit Starts April 2020 & Benchmark Softwood Lumber Prices: June 2020

WSPF-SYP-ESPF-2x4 Softwood Lumber Prices-2year-1Unit-US Housing STARTS

For the week ending June 5, 2020, prices of most standard construction framing dimension softwood lumber items remained flat, with benchmark item WSPF 2×4 #2&Btr KD still at US378 mfbm, as the week before. The price for this benchmark lumber commodity was up +$24, or +7% from one month ago. Compared to the same week in 2019 when it was US$298, this price is up +$80, or +27%.
Levelling out from previous gains, that week’s Western S-P-F 2×4 price remained almost even relative to the 1-year rolling average price of US$379 mfbm and was down -$22, or -6%, relative to the 2-year rolling average price of US$400 mfbm.

Madison's Historical Softwood Dimension Lumber Price Comparison Table JUNE 2020

The above table is a comparison of recent highs, in June 2018, and current JUNE 2020 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept 2015:

Shrewd investors know that construction framing softwood lumber prices are a good leading indicator for US housing activity, including home building and home sales. It is, however US house prices which have the best correlation to the movement and change of wood building materials.
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