Should I use water-resistant lumber for siding?
I would suggest using composite or PVC lumber in this application.  Composite boards are moisture and rot proof. They are made with wood fibers and recycled plastics.  Most are paintable so you can match colors.  The other choice  is PVC boards. Some are paintable, but most should be used in the factory color. If you do paint PVC, use a product that is specifically for plastics, regular latex paints will not adhere properly.

Pressure treated lumber is a good product for this application, however it is difficult to paint. It usually has a high moisture content and must be very dry before attempting to prime and paint. Not a good base for paints, however better for stains.

I'd stick to composites in your situation.