By Don Magruder
The RoMac Building Supply Wood Commodity Index (Index) for November surged 9.5 percent to $460.93 per thousand. Tighter supply issues in OSB and the prospects for lower availability of supply in spruce dimensional along with tariff concerns pushed the overall Index upward. As these markets get closer to the holidays and winter, the enthusiasm will slow down, and there are growing concerns in the housing sector over tariffs and a reluctance of the Federal Reserve to sustain an interest rate decrease in 2025.
The Lumber portion of the Index increased 11.1 percent to $499.12 per thousand as spruce dimensional prices pushed higher. Dimensional 2x4 spruce added 7.0 to 17.5 percent depending on the length while 2x6 spruce jumped 23.9 to 24.3 percent. Studs added 7.2 to 8.1 percent depending on length, but overall, the mood was shifting to concern as the prospect of countervailing duties and tariffs after the first of the year could drive prices higher. A lot of uncertainty regarding future tariff issues with European spruce is being sorted out by the market.
The sheathing portion of the Index increased 8.1 percent to $432.40 per thousand with CDX pine staying flat with pricing from October, but OSB sheathing added a solid $45 per thousand or almost 15 percent. OSB producers sighted a lower supply with a surprising jump in demand. There is doubt whether this will be sustained during the holidays.
It appears Florida could dodge its fourth major hurricane of the year in mid-November as Tropical Storm Sara is forecasted to be a rainmaker, but the three hurricanes over the last several months have subdued production which may have created some pent-up demand. The big concern for many in housing is the signaling by the Federal Reserve that future interest rate decreases may be much slower to occur as many see the new administration’s policy could usher in a wave of inflation. Embers of the recent inflationary period exist in the economy and concern about tariffs and federal spending will reignite this inflation in 2025 is real.
My advice to builders is to pay attention to the markets. A sudden implementation of tariffs across the board could create pricing and supply issues in 2025. I would be very wary of quoting projects for the spring at current pricing.
I hope everyone has a wonderful Thanksgiving and be sure to get your fill of turkey, pumpkin, and football. Happy Thanksgiving.
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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