April US housing starts fell 9.5% from March, possibly signaling cooler demand amid record-high costs for building materials, such as polyvinyl chloride, that have driven up home prices, according to data the US Census Bureau released May 18.
April housing starts reached 1.569 million units, down from 1.733 million units in March, when activity surged after a deep freeze that hit much of the US in mid-February hindered construction.
April housing starts also were 67.3% higher than 938,000 units in April 2020, when demand cratered amid the height of coronavirus pandemic-related shutdowns.
Domestic prices for PVC, a construction staple used to make pipes, window frames, vinyl siding, and other products, were last assessed May 12 at 85-87 cents/lb ($1,874-$1,918/mt), the highest since S&P Global Platts began assessing that market in 2001, reflecting 39 cents/lb in price increases accepted since June 2020.
While PVC demand plunged in April 2020, it began rebounding in May 2020 as consumers with means sought more space for long-term working from home and online education for their children amid office and school closures related to the coronavirus.
In addition, two hurricanes that hit Louisiana in August and October, on top of some operational issues, siphoned US PVC supply.
Supply had begun resuming normal levels by early 2021, but the freeze that forced weeks-long petrochemical shutdowns along the US Gulf Coast squeezed supply again, which has yet to return to normal levels.
Market sources said the 19.4% surge in March US housing starts from 1.457 million units in February stemmed, in part, from a rebound in construction activity that the freeze temporarily halted.
But some sources see the April decline as a sign that end-users are backing away from record-high prices of housing inputs like PVC. Sources said end-users have been pushing back, saying they risk siphoning demand further if they keep passing high prices to customers.
The Census Bureau data released May 18 showed that single-family housing starts in April reached 1.087 million units, down 13.4% from 1.255 million units in March.
US building permits authorized for privately owned housing units in April reached 1.760 million units, 0.3% above 1.755 million units in March, and 60.9% above 1.094 million units in April 2020.
Housing completions in April reached 1.449 million units, down 4.4% from 1.515 million units in March, the data showed.
Export PVC prices already have retreated from record highs. Export PVC prices in late March reached $1,800/mt FAS Houston, an all-time high since Platts began assessing that market in 1983. Prices retreated $50 a month later and were last assessed at that level of $1,750/mt FAS May 12.
Market sources said US export PVC prices, which are among the highest in the world, were not competitive with those in Asia and some other key export markets, such as Turkey and North Africa.
In addition, a widespread coronavirus-variant surge in India has suppressed demand there, which has had global ripple effects as sellers that cater to that net importing market seek other homes for PVC, sources noted.
