A once cheaper alternative to plywood is now the more expensive material. Bloomberg reports that OSB prices hit a record-high of $729 per thousand square feet last month as demand surges and supply tightens. While OSB has been used more heavily than plywood in residential construction due to the price of plywood, plywood prices plunged in the last month. Now, the pricey plywood substitute is raising home prices by $4,600 on average.
The engineered-wood product is at a premium to southern yellow pine plywood for the first time since 2006, according to RBC Capital Markets analyst Paul Quinn.
"We expect that this is at least partially due to higher housing starts given that buyers were less willing to substitute," Quinn said in an Oct. 12 report, adding that OSB is used more heavily than plywood in new residential construction.
Manufacturing OSB requires a different process and equipment than making plywood, meaning lumber companies can't switch over production to address changing markets.