First Quarter 2024 Lumber Market Industry Update 

We are delighted to share with you our latest insights and developments in the lumber industry for the fourth quarter. Outlined below is a comprehensive industry update, provided with the help of our valued business partner, LMC. We believe it will be a valuable asset for your lumber purchasing decisions and business development discussions. As we reflect on the past quarters and gear up for new opportunities, we trust this update will provide you with key information to navigate the dynamic landscape of the lumber market. Feel free to reach out if you have any questions or would like to discuss how these insights can be tailored to your specific needs. Thank you for your continued partnership!  

Annual Housing Starts and Permits March 2024 

Building Permits – Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,458,000.  This is 4.3 percent below the revised February rate of 1,523,000 but is 1.5 percent above the March 2023 rate of 1,437,000.  Single‐family authorizations in March were at a rate of 973,000; this is 5.7 percent below the revised February figure of 1,032,000.  Authorizations of units in buildings with five units or more were at a rate of 433,000 in March. 

Housing Starts – Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,321,000.  This is 14.7 percent (±9.9 percent) below the revised February estimate of 1,549,000 and is 4.3 percent (±9.4 percent)* below the March 2023 rate of 1,380,000.  Single‐family housing starts in March were at a rate of 1,022,000; this is 12.4 percent (±12.5 percent)* below the revised February figure of 1,167,000. The March rate for units in buildings with five units or more was 290,000.   

Housing Completions – Privately‐owned housing completions in March were at a seasonally adjusted annual rate of 1,469,000.  This is 13.5 percent (±11.0 percent) below the revised February estimate of 1,698,000 and is 3.9 percent (±13.5 percent)* below the March 2023 rate of 1,528,000.  Single‐family housing completions in March were at a rate of 947,000; this is 10.5 percent (±10.1 percent) below the revised February rate of 1,058,000. The March rate for units in buildings with five units or more was 502,000. 

Mortgage Rates Forecast for April 2024

Mortgage rates are expected to decline later this year as the U.S. economy weakens, inflation slows and the Federal Reserve cuts interest rates. The 30-year fixed mortgage rate is expected to fall to the mid- to low-6% range through the end of 2024, potentially dipping into high-5% territory by early 2025.

Builder Confidence 

Building Materials

As we enter the second quarter in the steel market, business seems to have picked up a little from inquiry/orders frequency seen in March. Most customers have light inventories but are only still buying what they need for the next 30 days or less.

The domestic rebar mills have good availability on most sizes of bar for prompt shipment. After domestic rebar prices have declined each of the last three months, it appears that prices may have stabilized since raw material & scrap costs for the mills has finally started to move up. There’s still an absence of imported rebar in the market, but stock will be landing at a few ports in the Northeast during April. May/June could be flat/down due to the demand of rebar. 

Commodity Building Materials 

Gypsum: 

The gypsum industry took a price increase in February 2024. There have been no signs of rolling back prices anywhere in the US. The strong housing demand is keeping gypsum plants busy. It is still unclear what impact, if any, the tragic Baltimore bridge collapse will have on the industry. Keep an eye on lead-times. This could disrupt the delivery of raw materials, which would stress the entire manufacturing network of drywall.

Steel Studs: 

Throughout Q1, the steel mill’s cost has continued to rise. So far, additional increases have not been passed along. Lead-times have remained steady while plentiful supply is able to support current market demand.

In the latest news, vessels destined for the Port of Baltimore were rerouted to alternate ports. The supply chain has yet to feel the impact; however, time will tell in the months to come.

Roofing: 

Owens Corning, CertainTeed, and Atlas Roofing remain on controlled distribution. Tamko and IKO are not operating under controlled distribution, but they are seeing extended lead times for many products. Owens Corning Supreme (3-Tab shingles) are off planned inventory and are open to order. There is still a granular shortage impacting OC and Atlas.

Foam:

Lead times on 25 psi XPS is averaging about 2-3 weeks. Higher density board can see 3-to-4-week lead times. Owens Corning has a 10% price increase announced for April 8th. Dupont has a pending increase of 9% for May 20th. 

Commodity Building Materials (Con’t)

Insulation:

Fiberglass – Capacity vs demand remains tight into Q2. We expect allocation will continue through the remainder of 2024. Housing permits and starts remain elevated, which impacts overall demand for insulation. Additional planned and unplanned maintenance can occur throughout the industry affecting capacity. Knauf’s new plant in Texas is not expected to add capacity until Q3 of 2024.

Mineral Wool – All 3 mineral wool manufacturers are on a tight allocation. Rockwool may see some production increases in Q3. OC/Thermafiber had some production issues and have been cancelling orders. There is no new capacity announced. Rockwool and Johns Manville have an increase announced for June and July.

Cellulose – Lead-times are 2-3 weeks with the increased demand in Q1. Timber HP is gaining momentum throughout the Northeast and is serving as a replacement for Mineral Wool insulation in some applications. So far, there hasn’t been any changes to pricing. 

Advice: 

Plan in advance! It is critical that you communicate your needs to set expectations wherever possible. Product should be ordered 4-6 weeks in advance

Windows: Window manufacturers are starting to announce price increase notices for mid to late Q1. These increases are more modest as they are citing labor, materials and freight as the biggest factors. The industry has been stable but lead times have varied depending on the manufacturer and or the product. Vinyl windows have been the most consistent with lead times in the 3–4-week range or sooner while we see varied intervals from our wood and composite vendor partners with lead times that could range anywhere from 6 – 12 weeks.  Current production levels are meeting the market demand for single family new construction windows which has been steady although it has been slowing down these last several months.

Diesel Fuel Pricing

• The national average diesel price saw a slight increase throughout the QTR1, ending the week of March 25th at $4.034/g. Year to date, we’ve seen an increase of around .16/g, but when comparing year over year, we’ve about .10/g cheaper.

• There are a lot of factors that will play into this market going forward with geopolitical issues being first on the list.  Outside of that, even though US currently is at record production, OPEC+ has continued their production cuts through QTR2 and demand is forecasted to increase.   Current EIA estimates are as follows:  QTR2 4.01, QTR3 4.05, QTR4 4.19