Mississippi Housing Market Slump Means Less Demand For Construction Materials
A slump in the U.S. housing market is pushing down the costs of building materials in Mississippi, the Biloxi Sun-Herald reports.
The prices of trees used for lumber began to feel the full effect of the dramatic downturn in residential construction markets this quarter, a Mississippi report by forestry analyst Forest2Market concluded.
In response, mills have cut production or curtailed for extended periods, citing the housing market conditions as the dominant factor.
Marshall Thomas, the president of Georgia’s F&W Forestry Services Inc., said Southern landowners are holding off on selling their trees until the prices they can get for them come back up. The result is a decrease in supply that is putting the brakes on even more drastic price drops, at a time when Mississippi mortgage demand is already slow.
“This is a buffer against overly sharp (standing tree) price declines and an advantage that tree farmers have over agriculture commodity producers. Most farm crops are perishable and must be harvested and sold or stored at maturity,” Thomas said.
Mississippi State University forestry professor Andy Londo said he expects the price of trees to go down for a little while but to come back up as the pace of rebuilding on the Coast picks up. Parts of the Florida and Alabama housing market on or near the gulf of Mexico are also still rebuilding from the damage wrought by Hurricane Katrina. A wet winter could boost forest prices further by making it more difficult for loggers to reach trees.
“Anything that increases demand or decreases supply, of course, increases the price for home construction on the supply side,” Londo said.
A home builder will always be happy to see the price of softwood such as pine drop in a building-supply market that has seen significant increases in everything from fuel to steel costs. Pine is used to build the structural components of homes. Hardwoods, such as oak, are used for finishing.
“Wood is the only thing on the Mississippi Gulf Coast to go down. Prices are down 15 to 20 percent since after the storm. Anything that drops the overall cost helps,” John Ruble, the president of Bayou Plantation Homes, said over the weekend.