It's Not Just Lumber. OSB Prices Have Jumped More than 500%

While lumber cost increases have gained a lot of attention over the past year as they quadrupled between April 2020 and May 2021, it isn’t the only building material to experience meteoric price increases recently.

As lumber costs are declining, the price of oriented strand board (OSB) has increased 510% since January 2020, according to the National Association of Home Builders. Since the start of 2020, price increases have passed 650% for some OSB products.

OSB prices have passed peak cost increases in lumber by nearly 180 percentage points. The increases seen in the plywood panel prices have been less than half of those seen in the OSB market.

“In addition to elevated prices, acute shortages have plagued the residential construction industry — particularly after the severe winter weather experienced in the south in February,” according to the NAHB.

In new construction, NAHB says OSB accounts for the most wood product used in structural panel applications.

The thickness of OSB sheathing is generally 3/8″ or 7/16″ (with some use of 15/32″) in wall applications. For those dimensions, mill prices have climbed an average of 491% since January 2020. For 15/32,” prices have risen less than 500%.

Prices vary by location. For instance, in Portland, Oregon, the “delivered” price of 3/8″-thick OSB sheathing has climbed an incredible 662% over the same period, according to NAHB.

In roofs, OSB sheathing is usually 7/16″ and 15/32″ thick because it is intended to resist “racking,” resulting from high winds or earthquakes, and support heavy snow loads, according to NAHB.

While OSB prices are rising, some builders are still waiting for lumber prices to work through the supply chain. While data from Random Lengths shows that the cost of framing lumber has dropped roughly 50% over the summer, the association says prices paid by builders have declined by a fraction of that amount. In fact, it says the prices quoted to builders are at record highs.

NAHB cites the supply chain as a significant reason for that disconnect. The issues are dealers’ inventory carrying costs and potentially important differences between the price at which inventory is bought and sold. Retailers and wholesalers try to avoid losing money by buying high and selling low.

Even with volatile prices, don’t expect builders to move away from lumber for framing anytime soon.

Four out of five builders polled in the June 2021 NAHB/Wells Fargo Housing Market Index (HMI) survey say a lack of experienced workers and subcontractors is a significant barrier to switching away from wood framing, the dominant residential construction method for new single-family homes in the US.  After that, the cost of materials is the second-biggest constraint cited by 42% of builders. An additional 25% of builders said the costs of re-designing and re-engineering homes to conform to a new construction method, as well buyer resistance and difficulties obtaining inspections and approvals from local building departments would preclude them from switching from traditional wood framing.