Timberland market indicators

• U.S. housing starts averaged 1.43 million units (SAAR) during the first quarter, down 5% from last quarter, but up 2% from a year ago.
• Single family housing starts held at an average of 1.06 million units (SAAR) in Q1, marking the sixth consecutive month with starts above 1 million units. Multifamily housing starts continued to trend lower, averaging 343,000 (SAAR) during the quarter, well off the recent peak of over 600,000 units (SAAR) reached in mid-2022.  
• The National Home Builders/Wells Fargo Housing Market Index fell to a reading of 45 in the May survey. As a diffusion index, a reading less than 50 indicates that a majority of home builders feel market conditions are poor.²
• Disinflation has slowed in the United States, encouraging the U.S. Federal Reserve to take a wait-and-see approach to cutting rates, tempering market expectations for multiple rate cuts in 2024, and allowing mortgage rates to move back above 7% in some U.S. markets.
• North American wood product manufacturers continue to be cautious in the current environment and are closely monitoring inventories and production.
• U.S. lumber prices moved slightly higher during the first quarter, with the benchmark Random Lengths Framing Lumber Composite price averaging $403/MBF.

• Australia dwelling approvals decreased 10.5% from the prior quarter, with single family approvals falling 7%, and multifamily approvals down 16%.
• The outlook for dwelling approvals remains mixed. Despite increased population growth boosting the need for housing, high home prices, mortgage rates, and continued elevated inflation are affecting affordability and slowing new home demand. 
• Softwood structural lumber prices remained flat and near historic highs in Q1 2024.  
• Softwood stumpage prices, available on a semiannual basis, increased 5% in the latter half of 2023 compared to H1, reflective of tight log supply despite lower-end market demand. 

• Softwood stumpage prices were flat to slightly lower on average in the U.S. South as domestic forest product manufacturing demand slowed in response to ongoing softness in residential construction and repair and remodeling expenditures.
• U.S. Pacific Northwest stumpage prices remained near lows experienced last quarter, with Q1 prices moving up 4% on average across the region. Mills have slowed production and lowered delivered log price bids in an effort to align consumption with a slow spring building season.
• New Zealand U.S. dollar (USD) stumpage prices increased 18% during Q1, a swing upward from the recent low prices of Q4 2023. New Zealand—China’s largest softwood log supplier—is navigating the strong downward shift in China’s residential construction.    
• Australia softwood stumpage prices decreased 1% in H2 2023 compared with H1, in USD. A limited supply of merchantable inventory to supply structural grade lumber demand is maintaining upward price pressure on stumpage. (Data for H1 2024 wasn’t available at the time of publication.)

• Q1 2024 U.S. timberland cash yields declined by 85 basis points (bps) from Q4 2023 to a value-weighted 1.44% across the United States.
• Driving operating revenue lower in the United States were reduced harvest volumes tilted toward greater declines in the U.S. West than in the U.S. South, while stumpage prices in both regions were lackluster. Lower operating revenue as timberland values were ticking higher resulted in cash yields falling to historic Q1 lows.  
• Q1 cash yields have averaged 2.39% over the past five years, with Q1 2024 cash yields 96bps below their historical average.  

• Publicly traded timberland values in the U.S. South appreciated 15% during the first quarter and moved ahead of private timberland values in the region.
• U.S. South private timberland (as reported by NCREIF) reflected strong comparable sales from 2023 to benchmark within appraisal values. U.S. South private timberland values increased 1.5% on average in Q1, a 7.3% increase over average Q1 values last year.
• U.S. South timberland values held by publicly traded companies (as measured by the Timberland Enterprise Value per Southern Equivalent Acre) in Q1 were 13.5% higher compared with a year ago.  

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