Siding prices are expected to rise with uptick in new residential construction

• May 14th, 2010
• In: Wood Siding
• By: Rob Sabo
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Lumber manufacturer Louisiana-Pacific’s first-quarter earnings are an indication that siding prices may be on the rise due to increased residential construction.

It wouldn’t be hard for residential starts to top numbers from 2009, which saw just 554,000 new privately owned housing starts. By way of comparison, two years earlier there were 1,3550,000 new housing starts, the U.S. Census Bureau reports. As a result, lumber manufacturing giants such as Louisiana-Pacific scaled back production as demand waned. Prices for materials such as siding dropped as well.

But LP’s recent first-quarter earnings showed a 20 percent increase in siding sales from ‘09. The company’s siding segment reported net sales of $90 million in the quarter, with a profit of $14 million before taxes, depreciation and amortization compared to $7 million a year earlier.

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The increase in sales and profitability, driven by increased demand from the residential housing market, means prices for siding also can be expected to trend upward as the residential housing market stages a recovery.

Reed Construction Data, which provides extensive data on the construction industry, says April construction starts were up 7 percent from March–but were 25 percent higher than a year ago. Although Reed Construction Data cautions that there is no clear sign the recovery has reached the construction market, large rises in new housing starts year-over-year, whether seasonal or not, signify an eventual rise in materials prices.

If you have a siding remodel project in mind for the year, now is the time to contact siding contractors and start getting bids on the work. Rising costs for siding escalate overall project costs. Don’t wait for the recovery to hit the housing market; begin your siding remodel project this spring.