US March housing starts surged 19.4% from February and 37% from March 2020, according to US Census Bureau data released April 16.
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Register NowMarch housing starts reached 1.730 million units, up from 1.457 million units in February and 1.269 million units the same month a year ago, the data showed.
The rush could mean all-time-high prices linger for domestic and export polyvinyl chloride, a construction staple used to make pipes, vinyl siding, window frames, and other products, market sources said.
Export PVC prices were last assessed at $1,800/mt FAS Houston April 14, the highest level since S&P Global Platts began assessing the market in 1983. Prices reached that level March 24 on acutely tight supply after about 57% of US PVC capacity shut down suddenly mid-February when sustained subfreezing temperatures hit much of the US, including the Gulf Coast.
Domestic PVC prices were last assessed at 82 cents/lb ($1,808/mt) April 14, having incorporated the latest of 35 cents/lb ($771/mt) in price increases implemented since June 2020 amid a coronavirus pandemic-fueled housing boom.
Some market sources had said the housing boom had likely peaked because housing starts declined month on month in January and February, but the mid-February deep freeze halted economic activity for a week or more in much of the country, to which other market sources attributed February housing starts falling to a six-month low.
The March surge to a near 15-year high could represent pent-up demand for housing as COVID-19 vaccinations become more widespread, leading to a stronger economic recovery faster than had previously been expected, sources said.
But record-high prices for PVC and other housing inputs, such as lumber, have generated increasing pushback from end-users, who say they can no longer pass those costs on to customers.
In addition, market sources said export and domestic PVC prices were expected to retreat in June when supply was anticipated to return to normal levels.
US supply has been tight since August. Formosa Plastics USA called force majeure in mid-August on operational issues, and Westlake Chemical declared force majeure at the end of August after the first of two hurricanes hit its Lake Charles, Louisiana, complex, which kept vital upstream PVC operations offline for weeks awaiting the restoration of full load electric power.
The companies lifted their force majeure events in early December and January, and export PVC prices that reached $1,450/mt FAS in mid-December retreated to $1,400/mt FAS in January.
Then the freeze hit, forcing shutdowns of PVC operations in Texas and Kentucky and reduced rates at Louisiana plants. Restarts depended on upstream cracker restarts, which took weeks because producers had to continually watch for freeze-related damage, such as cracks or pinhole leaks, in pipes at plants that were not built to withstand sustained frigid temperatures. Multiple turnarounds in March, April, and May also have kept or were expected to keep supply tight until June.
After retreat, housing demand roars back in March
But housing demand that hit a lull in February roared back in March. Housing starts reached their highest level since reaching 1.802 million units in June 2006, in the early months of the US housing bubble that crashed in 2008 as part of the global financial crash.
The year-on-year surge illustrates a sharp decline in US housing starts in March 2020 as pandemic-related shutdowns grew and workers huddled to do their jobs from home when able.
Construction activity largely stalled, and housing starts fell to 934 million units in April 2020 at the height of shutdowns. They ended 2020 with 1.670 million units in December as demand began rebounding in May as shutdowns eased.
The data showed privately owned housing units authorized by building permits reached 1.766 million units, up 2.7% from 1.720 million units in February and 30.2% above 1.356 million units in March.
Single-family housing starts reached 1.238 million units in March, up 15.3% from 1.074 million units in February, the data showed.
Housing completions in March reached 1.580 million units, up 24.4% from 1.280 million units in the year-ago month.