The Rising Influence of Rising Affluence

[DewDiligence]

WY 3Q18 CC transcript re US housing market:

https://finance.yahoo.com/news/weyerhaeuser-co-wy-q3-2018-182330923.html

[CEO]: I will start with a few comments regarding the housing market. Significant discussion is occurring regarding the trajectory of the U.S. housing market. The market continues to grow. Total starts increased nearly 4% year-over-year in September despite disruption from Hurricane Florence. On a year-to-date basis single-family and total starts have risen 6%.

Repair and remodeling activity, which drives about 40% of lumber demand, is up 7.5% compared with a year ago.

However recent monthly housing statistics have been volatile and in some cases softer than expected. We see no evidence of a change in underlying demand for housing. Employment and wages continue to rise with unemployment at the lowest level since 1969. Consumer confidence began 2018 above pre-recession highs and has increased sharply as the year has progressed.

Builders report strong demand at entry-level price points and indexes of builder sentiment remained very positive. However the rate of housing market growth appears to have moderated slightly indicating a potential mismatch between demand and available supply. While mortgage rates remain relatively low on a historical basis, continued increases in home prices and interest rates may be causing buyers at higher price points to recalibrate their expectations if they take affordability into account. We expect this will resolve as buyers and builders adjust product in response to the changing market backdrop.

For 2018 we anticipate total housing starts will be slightly less than 1.3 million [vs prior guidance of 1.3M per se], and we expect continued market growth in 2019.