Lumber and Building Materials Prices Pushed Up by Low Inventories

CME lumber futures were up limit two consecutive days two weeks ago, an increase of 10% that almost pushed prices to levels that would cover production costs. OSB prices went higher and order files moved well into December. At this point, more mills are shutdown than are operating. Even though demand is still weak, plywood and other building materials are marginally stronger due to thin supply. October housing permits and starts fell significantly from September, making unclear whether housing has bottomed at this point. The outlook for construction in the Atlanta - Athens Georgia area continues to be weak, particularly with seasonal slowness ahead. Georgia has lost another 18% of construction jobs since October 2008.