Whole House Commodity Index 01/18/16

wh 16-01-18th GRAPH web

Whole House Commodity Index - January 2016

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index in January added 0.2 percent from December as products across the board struggled to find increases because of collapsing oil prices, uneven demand, and sagging raw costs.  For the last couple of months, building supply pricing for the Index has hovered in a very narrow range of a couple of tenths.  There is no urgency to buy.

The biggest movers for the month were:

  1. CDX pine plywood added 1.4 percent while OSB sheathing gave back 1.3 percent.
  2. Roof truss prices added 2.1 percent on higher wood costs.
  3. Pine pricing was mixed, with 2x4 up almost 2.0 percent, wide widths remaining flat, and 2x6 down a couple of percent.
  4. Moulding pricing was down, on average, 5.0 percent as manufactures searched for buyers.

To say not much was happening in the last 30 days is fairly accurate, but typically there is not much happening during this time of year.

Interestingly, compared to last January, the Index paints a different story.  Pricing over the last year has changed substantially for some product lines.  Overall, in the last 12 months, despite a couple of major building code changes that added to the cost, the Index dropped 2.7 percent to $29,551.75.

Here are the more notable price moves in the Index since January 15, 2015:

  1. Wire Mesh is down 3.7 percent, with rebar plunging 29.4 percent. 
  2. Mortar mix is up 11.3 percent, with sand trending down 2.3 percent.
  3. CDX pine is down 21.2 percent, with OSB sheathing adding 21.4 percent.
  4. Felt is up 41.2 percent, because of Florida Building Code Changes.
  5. Most steel connectors are up double digits.
  6. 2x4 yellow pine is up 5.6 percent with wide width 2x12s adding 12.6 percent and 2x6 pine giving back 1.4 percent.
  7. Spruce studs are down 21.6 percent, with dimensional spruce adding almost 8.0 percent.
  8. Engineered wood is up 8.3 percent.
  9. Rolled fiberglass insulation is up (on average) 4.5 percent.
  10. Architectural shingles, despite all the yearly price gyrations, are basically flat from a year ago.
  11. Drywall pricing declined 6.7-9.0 percent, depending on size and thickness, as manufacturers looked for buyers.
  12. Because of Florida Building Code Changes that required a shift from aluminum to vinyl windows, window pricing is up 19.2 percent, and patio doors increased a whopping 31.2 percent.
  13. Exterior door pricing added almost 6.0 percent while interior door pricing added a couple of percent.  Bifold door pricing is up 9.4 percent, with overall moulding pricing retreating 6.1 percent for casing and 8.6 percent for base.
  14. Garage doors increased 3.1 percent on higher steel costs.
  15. Cement siding added 5.4 percent over the last year.

The building supplies which have more direct ties to the commodity markets have struggled the most over the last year.

So what does 2016 look like?  It is very concerning how the stock market is starting out the year.  In Florida, so much of the retirement income is directly related to Wall Street and a collapsing stock market could spell real trouble for the housing industry.  If the market stabilizes it should be a good year for Florida.  However, experts are divided on the direction of the market.

Overall, unless manufacturers and mills really curtail production, it appears pricing will struggle to make gains.  The oil patch will slow down dramatically with collapsing oil prices.  This will have a major impact nationally on housing and probably commodity pricing.  Without a significant weather event, pricing will struggle to maintain levels and continued declines will persist in 2016.  I expect prices on many items to remain flat to down for most of the year, with seasonal and demand gyrations.

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. .

Whole House Commodity Index 12/15/15

graph Dec-2015

Whole House Commodity Index - December 2015

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index in December gave back its 0.2 percent increase from November, as the market struggled to find a direction.  There is really no impetus to push pricing upwards, and with winter arriving later this year, pricing probably should have been firmer.  National weather forecasters are predicting winter to start in earnest the last week of December.  That prediction along with the holidays should have a chilling effect on pricing.

New home demand (while better) remains below historical averages.  Talk of a recession, plus interest rate increases in 2016 will not help.  The country needs a reset in regulations and some type of housing policy for production levels to return to historic norms. The collapse in the energy sector as well as other commodities could have a nasty impact on housing in the oil patch.  There are a lot of moving parts, and not many are moving in favor of housing. 

Here are some notable price movers in this month’s Index:

  1. Mortar mix was down 4.4 percent while sand gave back 2.3 percent, thanks to lower fuel pricing.
  2. Pine dimensional wood was mixed with 2x4 dropping 2.0 percent and wide width 2x12s adding 2.0 percent. 
  3. Spruce dimensional was basically flat with studs retreating 5.9 percent.
  4. Trusses added 1.0 percent on higher cost for specified grades.
  5. CDX pine increased 1.4 percent while OSB sheathing gave back 7.5 percent.  This is a reversal from the prior month and indicates the market is looking for a direction from demand.

The holidays and winter will be higher pricing’s biggest enemy over the next few weeks.  Something tells me the holidays and winter will win.

Thank you so much for reading the Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index, and please share it with your friends.  The report is free—just email us if you would like to be on the list.  From our family to yours, I hope and pray you have a Merry Christmas and a very prosperous New Year!

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. .

Whole House Commodity Index 11/17/15

wh 17nov15 GRAPH web

Whole House Commodity Index - November 2015

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index in November increased 0.2% to $29,545.21, as pricing gyrated based on uneven demand.  There is little doubt that the markets are in turmoil with little direction, as the commodity sector is undergoing real pricing stress.  As the holidays and winter approach, there appears to be little on the demand side that could reverse these market jitters.

Price increases in OSB, trusses and spruce offset the declines of other building material sectors. 

The following is the notable changes in this month’s Index:

  1. Rebar dropped 8.2% on excess overseas demand.
  2. CDX plywood dropped 1.4% while OSB sheathing added 12.0%.  The drop in plywood is probably foretelling a retreat in OSB that got too hot, too fast in price.
  3. Spruce dimension increased plus-or-minus 5.0% with spruce studs adding about 4.0%.
  4. Pine dimensional had wider widths remain flat-to-down with narrow 2x4 adding 9.6%.
  5. Trusses added 4.1% on higher wood costs.
  6. Architectural shingles dropped 3.1%, as manufacturers begin to really search for buyers.
  7. Drywall retreated $10 per thousand on slower demand.

Demand is fully in the driver’s seat, and the lack of it is beginning to pinch manufacturers.  If the economy does not make a spark, this could be a long, cold and slow winter.  Expect pricing to meander lower as the holidays approach.  Things could get really bad if the terrorism threat were to spread. 

Have a Happy Thanksgiving and be safe!

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.

Whole House Commodity Index 10/15/15

whci graph OCT-15 web

Whole House Commodity Index - October 2015

By Don Magruder

 

Since mid-September, the Ro-Mac Lumber & Supply, Inc, Whole House Commodity Index (Index) dropped 0.3% to $29,483, which represents its lowest price since December 2013. Deflation in commodities across the world is bearing down on prices and housing. This deflation coupled with uncertainty in the stock market appears to be creating a negative climate for housing in the final quarter. A limited number of commodity items rebounded over the last 30 days, but most believe it is a market gyration and not a developing trend.


On Monday, October 13, 2015, the Softwood Lumber Agreement between the United States and Canada expired. Some analysts believe there could be a wall of lower priced lumber heading for the United States. The agreement is very contentious and was put in place because American lumber producers contended that Canadian lumber producers were subsidized because of the Canadian government’s ownership of most timberlands.


Initially, no wall of lumber was seen heading to the states. However, as time goes forward with no agreement more Canadian lumber could flood the market, driving down prices. With that in mind, most gains in wood commodity prices over the last 30 days could easily evaporate given the agreement’s expiration and the approach of winter.


The following are the notable price movers for the month:

  1. Foundation mesh was down 1.9%, and traders were eager to make deals on blocks of rebar.
  2. CDX pine plywood dropped 6.7%, but it was offset by a 13.4% increase in OSB sheathing. This is probably a case of mix shift, as builders started flocking to lower cost OSB.
  3. Pine lumber in narrow widths was up 19.1% for 2x4s and 16.8% for 2x6s, while 2x12 wide with pine dropped 5.7%. In the past, narrow widths probably dropped too low and wide widths went up too much. Once again—I am not convinced this is a sustainable trend.
  4. Spruce dimension was a mixed bag with studs dropping 1.5% while dimension 2x4 added 2.3%, and remained flat on most other widths.

Most other building materials did nothing as many manufacturers were hoping the deflationary pressures being felt in commodities would not infiltrate their markets.

My advice to builders is be careful on pricing. Long-term pricing on dips could be dangerous—my main worry is not pricing but rather the markets. Everyone should understand this collapse in commodities usually foretells a weakening economy, and that could be a bigger challenge than volatility in the commodity markets. Nailing down business for the fourth quarter of 2015 and the first quarter of 2016 should be the focus.


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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