Universal Supply Co.
 General

September Market Update plan

Nov 18, 2013

As we conclude what has been quite an eventful summer, we look forward to discovering what fall has in store. As you'll read below, prices have leveled off from the steady increase we've seen consistently through 2013, making the coming months less predictable. Please continue to check in with your WBS Sales Team to ensure you're equipped and prepared for all your fall projects.

Costs Change with the Seasons

After experiencing a steady momentum of growth in housing this year, we're seeing activity begin to slow down in September. Although pricing pressure in framing materials has eased somewhat and is slightly down from last year at this time, building materials have taken the opportunity to pass through price increases that they have been holding off on for some time. Please consult with your WBS salesperson to better understand what impact, if any, this may have on your projects. These prices are also consistent with the usual deceleration of activity as we transition from Summer - the height of the building season. Aside from seasonal impact, mortgage rates have increased and could be a contributing factor to slower demand.

Builders Prepare, Strategize for New Impending Code

The 2012 International Residential Code has been adopted by five states already and is expected to gain more ground, particularly in the Northeast and Midwest. This new regulation places increased demand on I-joists over unfinished basements, requiring 1Ž2 inch gypsum board or the equivalent fire protection to be applied to ceilings and above crawl spaces used for storage or contain fuel-fired appliances. The new code has builders across the U.S. strategizing for the most cost-effective solutions, and many also are projecting how this change will affect the demand and pricing for I-joists in the future. I-joist producers are suggesting a solution to apply a half inch of drywall to ceilings to bring them up to code, while others suggest selecting sawn 2x10s to avoid the need for sprinklers and sheetrock. Forest Economic Advisors are projecting the code will give 2x10s a competitive advantage over I-joists by 2017, when the code is expected to be in effect for an estimated 60% of the nation.

Rate, Economy, Weather - And China - All Make Their Mark

This year marked the highest level of builder confidence (58%) in eight years, but shifts in housing trends through September are leaving traders with lists of uncertainties as they head into the fourth quarter. Analysts report recent gains in mortgage rates as a key factor impacting the industry's growth and they will be watched closely through the fourth quarter. Additionally, the economy as a whole continues to be hindered by slow job growth. Weather has made a great impact on lumber trade this year, particularly in the South, which has experienced a soaked summer. Traders are hoping for a dry fall to rectify the shortage. Lastly, exports to China jumped after a second quarter slump in softwood lumber. We'll be watching off-shore demand closely, as it impacts the Western lumber supply for the U.S.