Whereas interior woodworking projects require precisely dimensioned material with a smooth, blemish-free surface, outdoor building projects call for durability and affordability. Although not all products manufactured for outdoor have the same purpose, they all have one thing in common: They can be exposed to direct rainfall repeatedly without delaminating.
Marine Grade and CDX Plywood
The most durable exterior plywood material is marine grade, which is suitable for constructing boats and structures in direct contact with water. You don't need this level of durability and water resistance for houses, though. The most common plywood grade for exterior home construction -- used for wall and roof sheathing -- is CDX. The designation signifies that the face grade is C and D quality, which allows knots and other major surface defects, and the "X" stands for exterior. CDX plywood isn't pretty, but its toughness more than makes up for its looks.
Several plywood manufacturers produce T1-11, which is a type of siding material. It generally has a rough-sawn face that may feature vertical grooves that simulate board-and-batten siding when the plywood is properly trimmed. Like CDX plywood, T1-11 can withstand rain and moisture without a finish, and it's even more durable when painted or stained.