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Wednesday, September 5, 2012

August Market Update

It's hard to believe we are nearing the end of summer. We have survived the heat wave of 2012 and everyone is now gearing up for back-to-school and football season. As you would expect, we saw a decline in roofing activity during the hot summer months but it's now rebounding nicely as people are able to get back out on the job site. Despite the challenges facing the economy, and even the uncertainty surrounding the fall elections, we continue to see consumers coming off the sidelines and getting into the game. Both new construction and remodeling have strengthened as people choose to start spending money on their homes again. We are optimistic that this trend will continue for the remainder of the year. Commodity prices continue to put pressure on all levels of the market and many building product manufacturers have raised prices multiple times this year. Please work closely with your WBS representative to ensure your quotes are accurately reflecting the rapidly changing market. 

Lumber & Panel Prices Reflect Industry Improvements
At the close of August, framing material prices have increased again. After a slight dip in July, costs have increased 4.5% when compared to last month. August costs are averaging approximately 17.6% over the same time in 2011. This further confirms the overall upward trend shown throughout all of 2012. Since May of this year, framing materials have consistently been 13-20% higher than the costs in the comparable months of 2011. Cost increases can be attributed to a slow but steady recovery occurring within the building industry this summer along with diminished supply.

Building Permits Increasing, as Well as Projections
According to, the latest report on new housing starts and permits was released from the U.S. Department of Commerce showing permits were up 6.8% in July, the best the industry has seen since August of 2008. Single-family permits have increased 4.5% and multifamily permits have reached an encouraging 11.2% increase. This surge is expected to continue throughout 2012 and even into 2013 according to a combined analysis from five contributing industry experts representing the National Association of Home Builders, Mortgage Bankers Association, National Association of Realtors, The Engineered Wood Association and Forest Economic Advisors. As detailed in Random Lengths Report, the analysts raised forecasts for new-home construction in 2012 by 12.3% due to faster-than-expected growth throughout the first half of the year. Projections continue to be ambitious through the remainder of 2012, despite seasonal slowing in the 4th quarter, a struggling economy, and the upcoming presidential election.

Job Report: Surprising Shortage in Construction
Despite the troublesome fact that unemployment continues to linger around 8% nationwide, there are still scattered job shortages throughout the construction industry. Major needs are being identified in framing and other skilled trades, with shortages also reported in trucking and within mills. Many attribute the lack of skilled workers to the recession (workers returning to school or seeking other more stable professions), tougher laws on illegal immigrants, and workers' inability to pass drug tests. When considering the industry's upcoming revival, a veteran trader interviewed by Random Lengths Report said, "When this market really accelerates - I think within the next year - look out. Not enough loggers, not enough log truck drivers, not enough mill workers, not enough long-haul truckers, and now not enough construction workers. I think we're in for a wild trip." Stay tuned.