November 2023 Lumber & Commodity Report
By Don Magruder
The RoMac Building Supply Wood Commodity Index for November rebounded from last month’s decline as mills sought to influence the market pricing in a housing market that remains stagnant in starts. The Index increased $5.01 per thousand to $434.33 per thousand or 1.2 percent. The markets have been trading in a narrow range for several months, and it appears mills are very resistant to further decreases. A harsh winter will probably result in increased curtailments and mill closures to keep production in sync with housing starts.
The dimensional lumber portion of the Index increased by 1.6% as pricing was mixed based on size and species. Stud pricing ranged from a decrease of 3.4% to an increase of 10.5 percent depending on width and length. Dimensional 2x4 spruce was up 3.4 to 9.0 percent and 2x6 spruce added 6.0 to 13.3 percent. Wide-width 2x12 pine dropped 9.3 to 14.8 percent depending on length and 2x4 pine was down 13.0 percent. Because field inventories are low in a volatile market, specific sizes as they relate to availability appear to be the big price drivers.
The sheathing portion of the Index increased a meager .9 percent to $439.75 or $3.82 per thousand. CDX plywood dropped 3.1 to 9.4 percent while OSB sheathing increased 4.2 to 9.8 percent. CDX and OSB prices are drawing more in line as builders look for the best value. Price levels are to the level where mills may be very resistant to more price capitulations, especially as the new year begins.
If the Federal Reserve pauses interest rate increases and there is a real belief that interest rate easing may be in the future, housing starts may start to slowly rebound. Housing starts above 1.5 million units along with low ground inventories could make these markets volatile on the upside. It really depends on how 2024 starts and the severity of the winter in the northern regions. Builders should be slow to use today’s prices for projects starting in the spring of 2024.
We at RoMac Building Supply hope that you and your family have a blessed and healthy Thanksgiving holiday this week.
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.