By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for January 2025 decreased 9.6 percent to $413.95 per thousand as frigid, snowy winter weather along with continued higher mortgage interest rates were too much for housing demand. Mills and manufacturers, especially exporters, are concerned about the tariff policies of the new administration, and many are in somewhat of a holding pattern. Most believe something is going to come down, especially Canadian producers, and few are to set firm pricing guidance beyond January.
The dimensional lumber portion of the Wood Commodity Index declined 2.9 percent to $466.62 per thousand and most items were down in the lower to middle single digits. The exception was treated 2x4s, which added 10.1 percent as treaters entered the market preparing for the spring selling season. 2x4-16 #2 spruce was down 1.4 percent while 2x12x16 pine dropped 11.8 percent. As the weather warms and tariff policies become clear, I expect pricing to become volatile in the spring.
The sheathing portion of the Index dropped 9.6 percent as OSB sheathing dropped a whopping $90 per thousand on lackluster demand due to the wintry weather and slower demand. Over the last month, OSB has lost about 20 percent plus in pricing. CDX pine plywood dropped only 1.3 to 1.9 percent depending on size, and this market relies more on exports and that may explain the resilience of that market.
The market drivers this spring are simple - tariff policies, weather, and immigration deportations. If construction labor is lost due to deportations and building times extend out, markets could be a mess. Any loss in labor will significantly hurt the construction labor market which is already in a tough place with high wages and limitations on skilled workers. This could hit hard, especially in the roofing and drywall areas. Builders need to pay attention over the next 30 days as this could greatly affect the building times and pricing for the spring home-selling season.
Builders should have price escalation clauses in their contracts as well as Force Majeure clauses if labor indeed does become much tighter and more expensive. Hang on, the ride could get bumpy in the spring.
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.
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