January market Update

Mar 10, 2014

WBS January Market Update

We’re one month into 2014 and already bracing ourselves for spring. How we feel about the housing industry now seems quite reflective of our current feelings towards winter: We’re simply bearing great anticipation for things to get better… for temperatures to rise, activity to increase and things to start growing! In the mean time, prices remain steady and we continue to monitor and prepare for any unforeseen circumstances that may arise as a result of the housing revival. Please work with your WBS Sales Associate to properly plan for your upcoming projects and discuss the impact of any news below.

Cost of Framing Weathers the Cold

Prices have remained steady from December into January, as we experienced only a minimal dip in costs of framing materials. According to Random Lengths, many conclude the slight decrease in prices and slowing of activity can be attributed to the harsh winter weather. Snow storms and bitter cold across the U.S—even in the South—have hindered transport, slowed production, decreased demand and stunted orders. Also, mills were likely to entice buyers with low costs, due to predicted challenges in fulfilling transportation and inventory to accommodate increased orders.

Douglas Firs Cut Above the Rest

All framing lumber has seen increased demand while emerging from the recession, but no species’ price increase can compare to those of the Green Douglas Fir. One year ago Green Douglas Fir topped out at $369, $26 short of the Framing Lumber Composite Price (FLCP) which tracks price trends in all major North American regions, Random Lengths reports. In January, the Green Fir Composite reached $446, $42 over the FLCP. Most traders attribute the price hike to heavy demand for traditional Green Firs, plus record prices for Green Fir timbers, cuttings, and logs, while others believe it’s simply due to shortage. After the housing collapse, mills are approaching the resurgence with caution, adding production and additional shifts gradually.

Housing Increase Demands Labor

Housing permits have continued to increase in the wake of the recession. Permits filed at a seasonally adjusted annual rate (SAAR) have increased 92% from the lowest point in March 2009, yet construction employment rates only rose 7% from their lowest point in 2011. Sources say builders would like to hire help, but cannot find the skilled labor needed at the pay they’re willing to provide. Gradual and careful hiring has been a trend among builders waiting for more certainty to increase their payroll. A recent survey by the Association of General Contractors found 62% of participants expressed having a hard time filling professional and craft worker positions, showing there may be a shortage of skilled labor contributing to the problem as well.

Foreclosures down, Housing up in 2014

Core Logic reports, the national foreclosure inventory has dropped 31% from December 2012 to December 2013, which marks over two consecutive years of a continued decline. After years of high foreclosure rates throughout the recession, the foreclosure inventory is at the lowest level since 2007. Get more details directly from the Core Logic Report.