January 2017 Whole House Commodity Index

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Whole House Commodity Index 
January 2017  -  By Don Magruder

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for January 2017 increased 0.3 percent to $31,334.60. Concrete and rebar prices edged upward while other commodities were mixed. The general tone in the building supply sector is for increasing prices and more pressure on the supply chain as new sources of material are sought.

The notable movers in the Index for January were:

  • Metal Rebar jumped 3.7 percent.
  • Concrete increased a percent and some vendors added more.
  • CDX pine plywood added 0.7 percent while OSB was more aggressive with a 1.4 percent increase.
  • Spruce dimensional increased 0.1 percent to 6.5 percent on 2x4-16. The general concern is the future of the U.S.A—Canada Softwood Lumber Agreement and the real potential for countervailing duties later this spring. Some mills are now off the market in certain species.
  • Pine dimensional lumber drifted downward from 6.3 percent for narrow widths to 12.2 percent for 2x12s. Expect that to change as weather and spruce becomes more expensive.
  • Trusses added 0.3 percent on higher labor costs.
  • Treated lumber lagged downward from pine.
  • Increased freight costs are also impacting the commodity markets.

Since the start of 2016, the Index has increased 6.0 percent. With the caravan of increases announced in building material products for the spring expect 2017 to be worse.

My cracked crystal ball still shows higher prices and volatility. Builders should include a price escalation clause in their contracts to protect them for periods later in the year. The talk from the presidential campaign trail becomes real on January 20, 2017, and it appears the country could be heading from political uncertainty to policy uncertainty as everyone tries to figure out what is going to happen.

Short-term interest rate increases may get spring home buyers off the mark early; however, increased rates could have a chilling effect later in the year. My best advice to builders is to keep an eye on the markets and we will try to keep you updated.

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. .

December 2016 Whole House Commodity Index

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Whole House Commodity Index 
December 2016  -  By Don Magruder

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for December 2016 jumped 1.1 percent to $31,236 as unexpected strength in wood commodities lifted the total Index.  The stock market has been on a tear since the election and many in the supply industry believe that the proposed infrastructure spending could be a boom for commodities.  It remains to be seen if this will occur or if higher interest rates quell any such rally.  As of now, suppliers and manufacturers are feeling optimistic.

For mid-December, the notable movers in the Whole House Commodity Index were the following:

  • Steel construction connectors were up 3-5 percent on higher raw costs.
  • Trusses were up 3.8 percent on higher labor, workers’ compensation, and wood costs.
  • CDX pine plywood was up 3.5 percent, with OSB sheathing mirroring the increase with 3.6 percent.
  • Wide width 2x12 pine was up 10.8 percent, with narrow 2x4 pine adding 7.9 percent, and 2x6 moving forward 1.1 percent.  Specific tallies were demanding more money.
  • Spruce dimension pricing was mixed, with 2x6 spruce increasing 6.4 percent while 2x4 spruce gave back 5.7 percent.
  • 2x4 spruce studs added 5.3 percent.
  • Gypsum conceded on average 2.0 percent to market adjustments.
  • Vinyl siding and accessories added 4.0 percent.
  • Engineered beams dropped 7.1 percent on increased competition.

There was a lot of pricing activity in December and this may indicate that manufacturers and mills are preparing for an inflationary period in 2017.

The Canada—United States Softwood Lumber Agreement is somewhat in shambles and there is a real possibility that countervailing duties could be put on spruce lumber entering the United States from Canada by late spring.  Given the shift in the country’s policy under the new administration is seems highly likely this will happen.  The rub for builders is this duty could potentially raise lumber prices and shift the demand equation.  Tariffs and trade wars could be very bad for pricing next year and interest rates really could be the wild card.

Hang on—it could get bumpy in 2017.

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. .

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. .

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