The Home Builders Association Wood Commodity Index (Index) for December lost 4.0% as wintery weather took hold in many areas of the country forcing mills and manufacturers to scurry for buyers. As the holidays approach there appears little momentum for price increases and this could lead to a lackluster beginning to the New Year.
In the wood portion of the Index, prices dropped 5.7% as spruce dimensional was in full retreat. The amount of the decline was directly related to the popularity and availability of the size. Studs were down 6.3% while 2x4-16 SPF gave back 5.7%. Pine dimensional lumber did not follow the direction of spruce. Narrow width pine was flat with wider widths trading up in the 3%-6% range.
The sheathing portion of the Index was mixed, with CDX Plywood trading in a narrow range at par and OSB sheathing dropping $6-$10 per thousand. After the price gyrations in sheathing, the Index dropped 2.2% predominately on the weakness of OSB. If demand gets tangled up in bad winter weather, expect pricing to drift lower.
Drywall, roofing, insulation, windows, doors and molding are just a few segments in which companies have announced price increases after the first of the year. While many of these companies will contend price increases are needed to remain profitable, how many are willing to increase these prices in a market with subdued sales. There could be some first of the year deal making which takes some of the wind out of the price increases announced for next year.
As a builder you can’t bid a project for next year without taking in account all price increases, but when you issue purchase orders ask for current market pricing. Pricing realities change in the midst of a dark, cold winter.
Have a wonderful holiday season and prosperous New Year.
Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (www.romaclumber.com), and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at