The bitter winter froze home builders to start the year, but analysts and area lumber producers expect demand to bounce back.
Housing starts fell to an annual rate of 907,000 nationwide in February, down two-tenths of a percentage point from the January estimate, the U.S. Census Bureau reported this week. Last month’s housing starts were down about 7 percent from February 2013, the agency reported.
“Anything that can be done outside, which includes building a house ... people have been putting that off,” said Tim Cochran, associate editor of Eugene-based Random Lengths, a timber industry trade publication.
Housing starts typically area a leading indicator of domestic demand for lumber. While they have increased in recent years, housing starts remains two or three times below pre-recession levels.
Officials at Weyerhaeuser Co., Cowlitz County’s top lumber producer, said they’re expecting lumber prices to rise through the end of March because of rising demand. In their most recent earnings report in January, company officials said bad weather disrupted lumber production and sales at the end of last year and continued to be a problem in early 2014.
Weyerhaeuser’s Longview mill is the company’s largest on the West Coast. It accounts for about one-third of Weyerhaeuser’s lumber sales for the region and employs about 240 people.
Industry analysts say this early-year rough patch is an outlier, and lumber mills are continuing to recover slowly from the recession.
In January, production at West Coast mills totaled 1.195 billion board feet, up 3.4 percent from January 2013, the Western Wood Products Association reported this month. Nationwide, lumber output was 6.1 percent higher last year compared to 2012.
Cochran said mills are preparing inventory for a better 2014, but analysts remain wary that the weather will strike a deeper blow than expected.
“Is this just pushing business one or two months later, or will people just skip it for this year? It’s likely a mix of both. Some (producers) are ramping up to be prepared for that,” he said.
Cochran said that shuttered Pacific Northwest mills are reopening, which is a healthy sign for the industry. This month, Oregon officials announced a $5 million package of loans and tax credits to restart the Rough & Ready Lumber Co. mill in Josephine County, which is being converted to cut smaller logs.
“Lumber production being high is a symbol of good economic health,” Cochran said.