And I would say we’re slightly a little more optimistic on the pulp side just from what we saw earlier in the year. But — and I think that still is just keeping pricing probably fairly flat.
Operator: Your next question comes from the line of Mike Roxland with Truist Securities.
Mike Roxland : Jerry, just one quick question for you on lumber prices. You mentioned, I believe, I heard you correctly said that what you got your confidence that lumber prices may be bottoming here. Are there any particular metrics that you follow and you look at that give you that confidence that when the prices have 12.
Eric Cremers: Yes. This is Eric, Mike. I don’t think there’s any 1 metric that we look at. I — this is like a mosaic, and I’m trying to put all the pieces of the puzzle together. And in my mind, I know there’s a lot of mills in B.C. that are losing money. There’s likely to be a supply response who knows if that will happen. It’s up to them to decide. But that’s one factor. I think another factor is of late, the housing market has not completely collapsed. We’ve gone down from $1.6 million to $1.4 million which is not a precipitous drop. This is not in 2009. That’s 200,000 starts. And we’re also seeing a bit of a mix shift here over towards single family, which, as you know, single-family uses a lot more lumber than multifamily.
So I think about that. I also don’t think R&R markets are going to collapse either. When we were in COVID, everybody was buying lots of stuff, lots of stuff in boxes by the way. But after COVID, there’s been a swing back to services. And I think that’s now starting to play itself out. And people are now going to go back and look at their house and say they’ve got an enormous amount of home equity. They can’t go buy a new home because there’s very — or an existing home because there’s very little inventory out there. They got good balance sheets. They got good labor market prospects. I just think it’s natural that R&R is going to hang in there. It may not be so much on the Pro side. It may be more on the DIY side with these higher interest rates.
But I think R&R markets are hang in there just fine. So getting back to your question, there’s not any 1 metric that I look at. We look at many, many different factors. And in balance, I think next year is shaping up to be an okay year. It won’t be great, but it will be better than this year.
Mike Roxland : Got it. And apologies for referencing the incorrect name, it’s obviously it’s been one hell of the earnings season already. So I apologize for the incorrect name. Norris, but I also appreciate the color. And then just one quick question on just a follow-up on Chenal, and you’re mentioning how there’s been smaller take-up from builders. Obviously, that would be due to the slower housing environment, but what’s the line of sight you have in that business? And whether — is it just 1 quarter? Is it 2 quarters? And so maybe a little bit of a smaller take-up right now in 4Q, but could this be something to could reverse? Or do you see reversing 1Q, 2Q or early next year?
Wayne Wasechek: Yes, Mike, this is Wayne. A couple of things I would say. Look, we’ve had good take-up thus far this year. We start to go through a process where we release the next round of lots. And so we’re seeing a little bit of softness in the new lot releases. Now what does that mean? Keep in mind, these are regional builders. We’re not talking large national builders. So they have compared to a national builder, they don’t have the same type of balance sheets they definitely don’t have the multiple tools available to provide incentives to prospective home buyers. So perhaps these regional builders instead of building houses, they’re only going to do 8 or 9. But I think these are — we’re in the early innings on what we’re seeing, but this is just kind of as we look into Q4, we’re seeing a little bit of softness.
Operator: Your next question comes from the line of George Staphos with Bank of America.
George Staphos : I just wanted to come back to what you’re saying earlier on Mike’s question. So are you looking towards a better housing market next year? And specifically, are you expecting single-family construction to be up? And then you mentioned in your remarks that home center takeaway is up 15%, but no doubt it’s going to be tempered into ’24, if I’m paraphrasing correctly. So what do you ultimately want us to dial in, think about whatever the metaphor for repair and remodel as it relates to you for 24 versus ’23?
Eric Cremers: So there’s 2 different parts to your question, George. So the first one, single-family. If I had to guess right now, I’d say single-family is going to be up a little bit next year versus this year. Not a lot, but a little. And I think we’re starting to see signs of — the housing market, like I said, has not collapsed. The latest data was actually okay, if you step back and you look at starts, we’re up 3% month-over-month, the new home sales were up 12% month-over-month. We’re going to get to the middle of next year. And it’s — I think most people believe the Fed is going to pivot and start cutting rates. You still got an incredibly tight labor market. You’ve still got an underbuilt a few existing homes for sale.
I don’t think those factors are going away. So I do expect starts to be up a little bit next year, and I expect there to be a skew over to single-family as multifamily has got a lot of action over the last couple of years. So switching gears and talking about repair and remodel. So I can talk about the market segment in general. I cannot talk about our shipments, what percent of our shipments go into repair and model simply because when we sell it to a dealer distributor, we kind of lose track of it. I can talk specifically about our home center demand, which is going by and large, into the R&R market. So what I think is going to happen is that R&R is going to stay reasonably strong. It’s not going to fall out of bed. I’ve seen some of the forecasts out there that call it, for an 8% or 9% decline.
No, that’s FDA. RISI says R&R is going up 3%. Leer’s got a different number. That’s the housing — that’s the Harvard study. But I think intuitively, I would argue that it’s going to stay strong or even go up slightly next year as people start to pivot away from services back to goods, they invest in what is probably their favorite asset right now, their own house. The work from home trend, that’s not going away or more work, whatever you want to call it, I just think there’s a lot of reasons that people are going to want to put money back into their house. And so I don’t see R&R falling out of bed.
George Staphos : Understood. Appreciate the color on that. And then can you talk to us a little bit and maybe you mentioned it, what you expect for manufacturing costs in the fourth quarter for Wood Products relative to what we saw in the third quarter? Should it continue to be getting a bit better as you’ve been seeing progress this year?
Eric Cremers: Well, we have been seeing progress this year. And I would tell you that our total cash costs, they’re going to be down just a bit in the fourth quarter compared to the third quarter. But I think in this inflationary environment, having cash costs be flat is a win. They will be lower year-over-year on a rate basis per thousand but I expect cost to be just a little bit lower in the fourth quarter compared to the third quarter.
George Staphos : And one last question, I’ll turn it over. Hopefully, this isn’t the case. And actually, I’ll ask a quick follow-on to this. But let’s say housing is a lot slower next year and demand is a lot slower than what you would have expected. Do you have the opportunity to bring Waldo up more quickly and front-loaded as a way of managing against that? And then say differently, let’s say, instead of $1.4 million starts, let’s say, are up a little bit. It’s a boomer year for whatever reason. What do you do in that kind of environment? How do you manage your operating stance, what would you do differently?
