March 2014 Lumber and Commodity Report
LUMBER AND COMMODITY REPORT – March 2014
by Don Magruder, CEO of RoMac Building Supply
The Home Builders Association Wood Commodity Index (Index) for mid-March 2014 increased 3.3% to $332.88 per thousand as volatility entered the market. Manufacturers and mills desperately want bad weather to be the reason for sluggish housing numbers, and many are preemptively raising prices expecting a strong spring selling season. Over the next 30 to 45 days, the housing market should have clarity–either it is the bad weather or economic conditions.
The dimensional lumber portion of the Index increased 2.1% to $399.34 per thousand with single digit increases in spruce and increases of 4.5% to 7.0% in wide width pine. Much of the movement in the market was driven by specific availability of one species and size over another.
The sheathing portion of the Index was pushed 4.7% higher to $283.24 per thousand as strong price runs in CDX pine plywood led the way. 1/2″ CDX added $17 per thousand while harder to find 3/4” T&G jumped $30. OSB sheathing was uneven in its increases with thicker panels jumping less due to demand. The overall view of the market is firm; however, the direction is not certain as mills wait on an improving housing market.
One important factor to keep in mind and probably a good indication of the housing market’s strength is that last March this Index was $450.46 per thousand. This year’s Index price is down a whopping 26.2%, which could mean one of two things: housing is that weak or there is a lot of upside to this market. Builders should remain very diligent in pricing current projects and realize prices could go significantly up in two months. Now is the time to have a price escalation clause in your contract.
Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (romacfl.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 firstname.lastname@example.org.