November 2016 Whole House Commodity Index

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Whole House Commodity Index 
November 2016

By Don Magruder

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for November 2016 declined 0.7 percent to $30,889.33, as the markets tried to digest the future of housing in light of the surprising presidential election results.  A stubbornly inconsistent housing market coupled with a fizzle in hurricane season has given few manufacturers and mills an opportunity to lift prices.  It appears the markets may be starting the first stage of their winter hibernation.

Only two items in the Index increased in price—rebar was up 1.8 percent while 4x4-8 treated posts added 5.8 percent.  All other items dropped in cost at the wholesale level.  All spruce lumber was down 2.5-3.0 percent while pine lumber gave back more, with decreases ranging from 5.6-7.1 percent.  CDX pine plywood retreated 6.6 percent, with OSB sheathing handing back 3.5 percent.  The remaining items in the Index remained flat.

If anyone tells you what is going to happen next year in housing, don’t believe them—just ask President Hillary Clinton.  Here are a few things to watch as President-elect Donald Trump starts implementing his programs.

  1. A huge increase in infrastructure spending will require the government to borrow more.  The days of 3.5 percent interest rates are probably gone.  Plus it could be very inflationary for materials.
  2. If he implements his trade policies, expect tariffs to fly in all directions.  Pricing for wood and steel could become very volatile.
  3. If he builds a wall and deports millions of Hispanics, the bad labor situation could become much worse.  

There is little doubt about it, uncertainty is at play in the markets.  Things could get really good or really bad, depending on how all of these things shake out.  People in the construction industry should weigh their risk and exposure until a clear direction has been charted by the next administration. 

Have a wonderful Thanksgiving holiday and be sure to count your blessings one by one. 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index is based on wholesale costs of the base components to build a 2,200 square foot wood frame home with a concrete stem wall in Central Florida.  The Index includes foundation, metal, concrete, block, stucco, cement, wood framing, siding, sheathings, trusses, roofing, drywall, insulation, windows, doors, trim, garage doors, and most building hardware.  It does not include décor, electrical, plumbing, mechanical, landscaping, or labor.  Because the Index uses current wholesale costs, this should be a strong indicator of the direction of building prices for the next 30-45 days.

Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida.  Go to www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

October 2016 Whole House Commodity Index

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Whole House Commodity Index 
October 2016

By Don Magruder

Home builders dodged a large bullet on October 6, 2016, when Hurricane Matthew wobbled east about 30 miles, just off Florida’s coast, and averted what could have a been a natural disaster of epic proportions. A wobble or veer west by Matthew would have resulted in billions of dollars in damage, massive strains on the supply chain, and even worse a labor shortage like none other. New home construction in Florida could have easily been shut down as most skilled labor would have relocated to the disaster zone. Although the flooding and wind damage in certain areas on the Florida and Carolina coastlines was severe, it is far from widespread.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for October 2016 has a hangover from Matthew as sheathing prices jumped. However, the winter season and U.S. presidential election should drag those prices down in short order. For October, the Index increased 0.6 percent primarily on the price increase in sheathings. Since the first of the year, the Index is up 5.2 percent, which is strong given the up-and-down nature of the housing market in the last few months.

The notable price movers for October were:

  • CDX Pine was up 6.6 percent while OSB added 4.8 percent.
  • Rebar was down 7.1 percent as wire mesh retreated 6.5 percent.
  • 2x4 yellow pine added 14.2 percent while 2x6 pine added 4.2 percent and wide width 2x12 gave back 6.3 percent.
  • Spruce studs added 2.2 percent and 2x4 spruce dimensional jumped 3.7 percent. 2x6 spruce was flat to down 0.4 percent.
  • Drip edge added almost 3.0 percent on continued increased in steel costs.

The market could retreat as hurricane season becomes less threatening.

Market signs and the time of year are not pointing to higher commodity prices. A wait and see attitude on many things in business is going on as Americans prepare to vote. One thing is for sure, a wobble east made this report much easier to write. Everyone is truly blessed.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index is based on wholesale costs of the base components to build a 2,200 square foot wood frame home with a concrete stem wall in Central Florida.  The Index includes foundation, metal, concrete, block, stucco, cement, wood framing, siding, sheathings, trusses, roofing, drywall, insulation, windows, doors, trim, garage doors, and most building hardware.  It does not include décor, electrical, plumbing, mechanical, landscaping, or labor.  Because the Index uses current wholesale costs, this should be a strong indicator of the direction of building prices for the next 30-45 days.

Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida. Go to www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

September 2016 Whole House Commodity Index

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Whole House Commodity Index 
September 2016

By Don Magruder

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for September 2016 fell as wood commodities offset any gains from other building products.  Tropical rains, with no accompanying storms, have slowed the construction pace leaving some to wonder if the market will be drifting lower over the next few months.  With the approaching United States presidential election and the chaos associated with it, many are speculating the close of 2016 will be unimpressive.

Over the last 30 days, the Index dropped 1.1 percent to $30,920.24, which wipes out all increases for the summer.  With chances dimming of any significant hurricane activity the market will have to be its own catalyst to stop the decline. 

Despite the overall decline in the Index, there were areas in which pricing increased due to increases in the cost of labor and operational costs.

The following are the notable movers in the Index:

  • Wire mesh added 6.1 percent and rebar 3.7 percent as the price of metal drifted off the bottom.
  • Garage doors added 5.0 percent on increased steel pricing.
  • Drywall gave back $10 per thousand (or about 4 percent) to meet market conditions.
  • Truss prices dropped 4.2 percent on lower lumber costs.
  • Pine pricing printed down with 2x4 off 9.8 percent; 2x6 down 5.0 percent; and, wide-width pine falling 8.0 percent.
  • Spruce dropped as studs declined 2.1 percent; 2x4 dimensional decreased 3.9 percent; and, wider 2x6 spruce eased down 5.3 percent.

Keep in mind, base building material costs increased in September; however, a falling commodity market covered up the gains.  As these markets adjust back up later, builders could get stung on bids.

The next couple of weeks will dictate what type of fall the housing market will have.  My bet is somewhat flat as Americans try to sort out their political future.  No doubt about it, each side will tell supporters the world will end if the other is elected and that in itself could suppress the market.  Unless there is a surprise hurricane late in the season there will be little to move this market upward.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index is based on wholesale costs of the base components to build a 2,200 square foot wood frame home with a concrete stem wall in Central Florida.  The Index includes foundation, metal, concrete, block, stucco, cement, wood framing, siding, sheathings, trusses, roofing, drywall, insulation, windows, doors, trim, garage doors, and most building hardware.  It does not include décor, electrical, plumbing, mechanical, landscaping, or labor.  Because the Index uses current wholesale costs, this should be a strong indicator of the direction of building prices for the next 30-45 days.

Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida.  Go to www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

August 2016 Whole House Commodity Index

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Whole House Commodity Index - August 2016

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for August 2016 gyrated in place, with various fluctuations, which at the end left the Index flat. This could be a sign that the housing market is cooling as some sectors begin to use price to prompt orders. The next four to six weeks of hurricane season will probably determine whether these markets move or stay in place.

The Index finished at $31,264.06, which is almost $4 above the previous record high in July.

The notable movers in this month’s Index were:

  • Wood mouldings retreated 4.2 percent on casing and 5.9 percent on base as supply outpaced demand.
  • 1/2” drywall added 4.8 percent as manufacturers suspended special summer pricing and are waiting to see if weather can jolt demand.
  • OSB sheathing added 3.0 percent while CDX pine plywood gave back a whopping 8.5 percent. These numbers do not bode well for overall demand.
  • Dimensional spruce was up on average by less than 2.0 percent and, in many sizes, flat.
  • Spruce studs added 2.2 percent.
  • 2x4 and 2x12 pine added about 2.0 percent while buyers of 2x6 pine had to pay 8.8 percent more.
  • Treated 4x4-8 posts were down 4.7 percent.
  • Roofing shingles added between 5.0 and 6.0 percent.
  • Vinyl soffit gave back 1.0 percent.

Once again, the market saw a lot of gyrations but very little movement.

Builders should be wary of hurricanes this time of year. Locking in bids for the next month, or so, may be a good idea. Lately, there have been a lot of job delays because of labor shortages and heat. The heat will subside in the next month, or so, but the labor shortage issue shows no signs of abatement, especially with the pending workers’ compensation increase scheduled to take hold October 1, 2016.
Expect items with heavy labor burdens to start increasing by mid-October. Some smaller companies may be forced to capitulate and go out of business. Every day, the small guys are just clapping their hands and closing shop. Make sure you have good subcontractors and be very careful about chasing nickels now, when later you might be paying quarters just to find someone to do the job. Builders who have strong subcontractor relationships should be just fine.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index is based on wholesale costs of the base components to build a 2,200 square foot wood frame home with a concrete stem wall in Central Florida.  The Index includes foundation, metal, concrete, block, stucco, cement, wood framing, siding, sheathings, trusses, roofing, drywall, insulation, windows, doors, trim, garage doors, and most building hardware.  It does not include décor, electrical, plumbing, mechanical, landscaping, or labor.  Because the Index uses current wholesale costs, this should be a strong indicator of the direction of building prices for the next 30-45 days.

Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida. Go to www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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