By Don Magruder
The RoMac Building Supply Wood Commodity Index for March 2024 increased 9.9 percent to $509.97 per thousand over the last 30 days as the warmer weather of spring has created more enthusiasm for spring building. While the Federal Reserve continues to disappoint builders with higher interest rates and diminishing chances for a decrease in the spring, the stability of interest rates is encouraging the pent-up demand to move. Let’s face it, Americans are not very patient, and with low affordable housing inventories along with persistent dreams of home ownership, many will go forward despite the interest rates.
The dimensional lumber portion of the Index increased to $477.61 per thousand or a 3.6 percent increase. All but 2 items on the Index were up since last month, with dimensional spruce increasing from flat to 18.7 percent depending on lengths. Shorter lengths earned premium pricing. Studs across the board were up 10 percent plus and wide-width 2x12 pine bounced back in pricing increase by 6.2 to 11.4 percent. Little doubt, the movement is up.
The sheathing portion of the Index increased 14.5 percent to $534.14 per thousand, and OSB sheathing is the main driver which has jumped dramatically over the last two weeks. OSB since last month is up $110 per thousand or $3.52 per sheet, and there are no signs these prices are abating as inventories on the ground are slim and production cannot keep up with demand. Interestingly, over the last 30 days CDX pine plywood is down 2.2 to 5.3 percent, however, in the last week, pricing has rebounded upward primarily caused by the shortage of OSB. At this point, it is evident that the sheathing markets have some pricing legs, and builders should expect prices to increase over the next month.
Anecdotally, it appears the demand equation is improving, and this year, there appears no banking crisis is in the offering. The overall housing shortage in America is pushing builders and developers forward, and despite interest rate levels, it is believed by most that permitting and starts will be improved this year. If that does occur, there is little doubt pricing will continue to increase and there may be some volatility in the next few months. I continue to encourage builders to include price escalation clauses in all contracts as pricing could move quickly.
It’s highly likely that pricing will be up in March, and builders may want to consider starting projects a little earlier to beat the increases.
To everyone, have a blessed and enjoyable Easter.
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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