In last month’s column, I expressed concerns about the declines in the wood commodity markets noting that these markets were the best indicator as to the health and direction of the housing industry. I pointed out that by mid-March the spring selling season, or Christmas, should be in full swing for the markets.
Well, Santa hasn’t come yet. In fact, it is beginning to look as if this scoundrel is on vacation. The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) dropped 4.0 percent, or $12.60 per thousand, to $302.82 on a full retreat in the spruce markets. Many in the industry still open with a weather report when discussing why the housing market continues to remain subdued. Most fail to realize that in the three biggest states in the union the weather has been fine this winter.
The dimensional lumber portion of the Index over the last 30 days dropped 8.5 percent to $332.28 per thousand. The search by mills for buyers pushed pricing lower as expectations for both imports and exports have not materialized for the year. The demand side of the equation is the dominant denominator.
The sheathing side of the Index increased 0.3 percent to $280.81 per thousand. Tighter manufacturing availability pushed CDX pine plywood pricing up 3.1 percent on 5/8-inch. Single-digit increases occurred in the other thicknesses. OSB sheathing pricing drifted flat-to-lower as availability remained plentiful. The spread between pine plywood and OSB sheathing is over $300 per thousand, and it is reaching a point wherein some builders may reconsider the use of OSB products.
The time is now to have a run on pricing. If in the next two weeks, or 30 days, pricing does not catch steam, builders should be real concerned about this year’s housing market. With that said, do not use the prices you have today to quote a project in mid-summer. If the winter weather has been the main deterrent to housing, then prices will rise quickly over the next 30 days. Let’s see if Santa Claus finally arrives for the housing market—we should know quickly.
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