NEW YORK, NY--(Marketwire - Feb 5, 2013) - Record low mortgage rates, pent-up demand and an overall improvement in the economy have led to a sharp rebound in the housing market. The improving outlook for the housing market augurs well for lumber and wood production industry. Last week, Weyerhaeuser reported strong quarterly results as it benefited from an improved housing market. Investors are now focusing on Louisiana-Pacific Corporation's fourth quarter results, which are scheduled to be released next week.
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The data from the housing market over the past year has pointed to a strong recovery. Across the U.S., housing starts are rising, inventory is down and prices are improving. The trend is likely to continue going forward as the fundamentals for the housing market look good. The improvement in the housing market is driven by record low mortgage rates. And with the Fed expected to continue with its bond buying program, under which it is buying $40 billion in mortgage-backed securities each month, mortgage rates are expected to remain low. This should further boost the housing market. Also, improving labor market should help housing market.
A couple of weeks back, Weyerhaeuser, which builds single-family homes and owns or controls over 6 million acres of timberlands, reported solid financial results for the fourth quarter. The company continued to benefit from the improving housing market in its fourth quarter.
Weyerhaeuser's net earnings for the fourth quarter were $143 million, or $0.26 per share, compared to net earnings of $65 million, or $0.12 per share. Net sales for the fourth quarter were $2 billion, up from $1.6 million reported for the same period in the previous year. For the full year 2012, Weyerhaeuser's net earnings were $385 million, or $0.71 per share on net sales of $7.1 billion.
Dan Fulton, President and CEO of Weyerhaeuser, stated back then that as he looks forward to 2013, he is excited by the opportunity to build on the momentum of the past year. Fulton said that in 2012 the company began to realize the results of its work to position itself to capture the benefits of an improving housing market and as a result, the company's bottom-line improved significantly.
Next Friday, Louisiana-Pacific, which manufactures building products, will report its fourth quarter results. Although the housing market has improved, the company was cautious in its outlook at the time of release of third quarter results in November of last year. Curt Stevens, the company's CEO said that while housing market signs look very favorable, the company is certainly cognizant of potential headwinds including a slowing global economy, an uncertain political and fiscal environment and slow job creation.
In the third quarter of 2012, Louisiana-Pacific had reported a 33% increase in total sales to $468 million. Stevens said that the company was able to take advantage of an improving housing market in the third quarter of 2012.
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