South Dakota builder plans sixfold storage expansion to buy lumber at a two-year low

The Mitchell Planning and Zoning Commission on Monday recommended moving a landlocked parcel at 1912 S. Miller St. into an industrial district, the Mitchell Republic reported. It is now zoned for urban development. The City Council has the final say. City planner Mark Jenniges said the change lets the parcel be replatted with Jensen's adjoining land, and a building permit would follow the plat merge.

Jensen told the paper the extra space is for inventory, not for building more houses. The company buys a full tractor-trailer or rail car of material at a time, four to eight months ahead, and he compares it to a farmer holding corn in a bin. When national markets slow and South Dakota stays busy, he said, that is the moment to load up, and the low price gets locked in for his customers.

National numbers support the timing on framing lumber. Madison's Lumber Price Index stood at $459.10 per 1,000 board feet on Oct. 30, down 9.4% in a month and 4.4% in a year, according to the National Association of Home Builders. NAHB also says lower mill prices can take weeks to a couple of months to reach builders, and bigger buyers tend to see relief sooner. Panels are moving the other way: Jensen said plywood and OSB prices are rising, and he plans to call in a commodity broker contract on plywood once prices dip.

For scale, NAHB cites Home Innovation Research Labs surveys that put an average new single-family home at roughly 15,000 board feet of framing lumber, more than 2,200 square feet of plywood and more than 6,800 square feet of OSB. The Mitchell Republic did not report what the addition will cost.