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US housing starts fall 5.1% on month in August: Commerce data

Increase font size  Decrease font size Date:2020-09-21   Views:181
US housing starts in August fell 5.1% to 1.4 million from July, retreating after three months of strong gains, US Department of Commerce data showed Sept. 17.

However, single-family housing starts in August reached a rate of 1 million, up 4.1% from July's 981,000, illustrating demand growth for stand-alone homes apart from high-rises and other dwellings that keep residents clustered in close quarters amid the coronavirus pandemic and long-term prospects for many of working from home.
The data further illustrated demand and pricing trends for polyvinyl chloride, a construction staple used to make pipes, window frames, vinyl siding and flooring and other products key to homebuilding.

US export PVC prices plunged 39% in six weeks to $520/mt FAS Houston on April 29 as demand cratered amid widespread coronavirus-related shutdowns and economic shocks. PVC demand is heavily linked to economic health and GDP growth.

However, prices have more than doubled since then on a mix of rebounding demand and tight supply, last assessed Sept. 16 at $1,050/mt FAS Houston. Producers had not fully restored production rates after slashing them in April, and force majeures on PVC declared in August by two producers further siphoned export volume availability.

Domestic prices reach five-year high
Domestic PVC prices have seen similar volatility.

Prices fell 8 cents/lb ($176/mt) in April and May to 47 cents/lb ($1,036/mt) when demand crashed, but have more than regained that loss with a rise of 9 cents/lb ($198/mt) in June, July and August to 56 cents/lb ($1,234/mt), a five-year high.

All four producers are seeking another 3 cents/lb $66/mt) in September – including Formosa Plastics USA, which declared force majeure on PVC Aug. 14. Formosa, Shintech and OxyChem, the chemical division of Occidental Petroleum, also are seeking an additional 5 cents/lb ($110/mt) for September.

Westlake Chemical, which declared force majeure on PVC and upstream vinyl chloride monomer on Aug. 31 after Hurricane Laura left its Lake Charles, Louisiana, complex offline without power, has not announced an additional 5 cents/lb price increase for September.

US PVC supply was expected to remain tight through October, when Shintech has a turnaround slated for its 635,000 mt/year PVC plant in Plaquemine, Louisiana. Market sources said prices could retreat by November as supply becomes more available and if demand wanes seasonally as is typical.

Home buyer and seller confidence rose in August amid continued low mortgage rates and eased economic concerns, data from realtor.com shows.

"Significant uncertainty remains for the housing market going into the fall, as the economy and schools face road bumps in the months going into the election," realtor.com said on Sept. 10. "Improved selling prospects is a good sign and will need to remain on that path to bring more homes into the market."

The Commerce Department data released Sept. 17 also showed privately owned building permits in August reached 1.47 million, 0.9 percent below 1.483 million in July, and 0.1% below 1.471 million in August 2019. Single-family permit authorizations reached 1 million, 6% higher than 977,000 in July.

Privately owned housing completions in August reached 1.233 million, 7.5% below 1.333 million in July, and 2.4% below 1.263 million in the year-ago period. Single-family housing completions in August reached 912,000, 4.4% below 954,000 in July, the data showed.
 
 
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