By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for mid-February 2023 increased a whopping 17.5 percent to $404.47 per thousand as the wood commodity markets reversed a trend of 7 months in decline. Every item on the Index increased in price, and as the weather warms into spring and demand picks up, the expectation is for rising prices to continue. Even with the huge increase since January, the Wood Commodity Index as compared to last February is an unimaginable 66.0 percent lower. Most builders remember very well the record pricing from last year, and nobody is expecting anything close to that level.
The dimensional lumber portion of the Index increased 23.4 percent to $469.41 with price increases throughout all species. 2×4 dimensional spruce was up $75 to $95 per thousand or 21.3 to 31.6 percent depending on the length while 2×6 spruce added 11.0 percent. Spruce studs were up 24.7 percent with premium lengths costing more with limited availability. 2×12 pine surged on availability issues 14.4 to 41.3 percent or $65 to $170 per thousand- huge increases. Pine 2×4 was up 23.9 percent as most pine incurred significant gains.
The sheathing portion of the Index increased 12.2 percent to $355.96 per thousand or about $1.24 per sheet. OSB sheathing increased $30 per thousand while CDX was much higher with ½ CDX adding $113 per thousand and 5/8 CDX increasing $40 per thousand. Supply and trucking are tightening up with Florida approaching fruit and vegetable season.
Home pricing remains firm and demand, while down, has remained consistent through the winter. Expect demand at all levels to improve in the spring and this coupled with mill curtailments to suggest pricing will go higher in the next few months. Builders should make sure all contracts have price escalation clauses and be mindful supply could be a little less plentiful. Spring could easily be a surprisingly good home-selling season if interest rates remain stable.
The RoMac Wood Commodity Index is a weighted lumber and sheathing composite based on usage in Central Florida. By using wholesale pricing, the Index is a good indicator of the pricing direction for the next 30 days.
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida, he is a former president of the Southeast Mississippi Home Builders Association and a past Associate Vice President of the Home Builders Association of Lake County.