There’s a building boom happening in the US and Canada… New houses are being built at a crazy pace… pandemic notwithstanding.

All the relevant metrics, like permits, starts, and completions, are up year-on-year in the United States, for example.

In other words, the whole market is booming.

And you need to know how to profit from it. Here at the Financial Star, we inform you about the largest trends and the hottest investment topics… so you can stay abreast of all the relevant facts and position yourself to profit from what’s going on.

And this trend is all about commodities. Specifically, lumber.

Look at this chart.

Over the past year, lumber prices have almost quadrupled.

The drops in September 2020 were mostly seasonal… Meaning that they don’t change the bigger picture and they do not tell us that there’s anything wrong with the overall trend.

Here’s what’s going on… and how to profit.

Housing in the United States

Here’s what’s going on… and how to profit.

In short, the housing market in the United States is on fire. And there are no signs of it slowing down.

Better yet, this housing bull market has strong fundamentals. So before anyone starts talking about “another subprime crisis,” they should consider the facts.

First, these mortgages are being given to the people that can afford them.

These home buyers have high credit scores and sizeable down payments, unlike before the Credit Crisis. As a reminder, back then, the opposite was true. Loans were given to buyers with low scores, sometimes with no down payment at all.

Second, more people than ever are working from home. Before the pandemic, only 17% of people worked from home in the US. During the Covid crisis, almost 44% of the total workforce are performing their duties from home.

So it makes sense that people want to upgrade their homes… or move into new ones with more space… to set up offices, gyms, and other private spaces to continue working and exercising while the pandemic prevents them from using public office space and public gyms.

So they are buying houses… larger houses to accommodate their new needs.

That, of course, is driving the housing market.

Plus, millennials are now the largest generation in the United States, and they are settling down… starting families… and yes, buying houses.

Housing in Canada

The Canadian housing market is going through a similar process… millennials buying houses… people moving from office to remote workspaces…

Adding to the usual suspects in Canada is also a market imbalance. Put simply, there’s too much demand and not enough supply.

Consider this. In 2021, housing prices in Canada were rising at their fastest annual pace ever recorded.

This is very bullish for the rest of the year. As the market is emerging from its Covid-driven slump, we’re seeing signs of a massive long-term bull. Both prices and sales are soaring.

…which, of course, is great for commodities.

What Does It Mean for Lumber?

The housing markets in both the US and Canada… as well as such initiatives as Joe Biden’s $2.3-trillion infrastructure plan… all of them mean that more things will be built. And they will require concrete, metals, and wood.

And this is exactly what is happening. The copper price is up about 15% since the beginning of the year… iron ore is up 18%…

And lumber is up 48%.

And it will go higher.

First, Covid shutdowns resulted in lower supply. And production is not up to normal levels yet. Which means that the soaring demand will continue to be the deciding factor.

And, as we said earlier, demand is growing fast both in the US and Canada.

Second, homebuilders’ sentiment is extremely bullish… and these people see the real picture. The homebuilder confidence index is at 83 in the US now. As a reminder, anything higher than 50 is bullish. So we’re in extremely positive territory.

Third, governments will find a way to support the lumber industry to keep construction going and their infrastructure projects live. So we won’t be surprised to see lower tariffs on lumber and even subsidies for lumber producers.

In other words, everybody needs lumber, and it’s the best time to position yourself accordingly.

Thank you for your loyal readership,

The Financial Star team