Most of you probably were not born when the TV detective “Columbo” was popular. Columbo’s style was the appearance of being a bit oafish, and he always paused when walking away from an interrogation, and said, “There IS one little thing that I am wondering.” In my market analyses and forecasting my Columbo method is referred to as the Overlooked Obvious.
For example, January Housing Starts. Most folks look at Seasonally Adjusted Data, January new home starts were down 4.5%, blamed on winter weather, however there is another layer that I wonder why analysts overlooked. Actual, not seasonally adjusted monthly starts have declined for 7 consecutive months from 154.3k to 117.6K…a 24% decline…the lowest level since February 2021.
Using that data, is it an absurd idea to think that lumber demand has been declining for eight months? If so, where has all the wood gone since last August when we bottomed at $400 and have rallied $1000?
I submit, all those over-packed reloads and warehouses are full of pre-bought lumber and panels. Who owns it? Builders, developers and middle-handlers who covered spring jobs last fall and winter.
What does that mean? LBM dealers are not under bought for March, April and May. Housing is good, but framing lumber has been pre- bought…spring orders orders will be less than expected, mill down to builder. Production and logistics be damned. Lumber is over-bought and temporarily under-delivered.