Whole House Commodity Index 04/18/16

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Whole House Commodity Index - April 2016

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for April had the biggest one month increase in two years, but the Index still finished under last year’s level.  Building materials and commodity markets are trying to develop some upward momentum, but overall market strength is just not there—it’s spotty. 

Over the last 30 days, the Index increased 1.7% to $30,145, which is about a half point lower than April 2015. The vast majority of the items were flat, with those increasing pricing doing so with moderate enthusiasm. 

Below are the primary movers in this month’s Index:

  • 5/8” rebar was up 22.9% on higher than expected demand.
  • CDX plywood dropped 1.6% while OSB sheathing added a whopping 11.3%.  Until this month, those markets had been moving in tandem.  This could be a sign of price shoppers entering the market.
  • Truss pricing was up 4.7% on increased demand and higher pine pricing.
  • Dimensional spruce was up a little more than 2.0% while studs were flat to down.
  • 2x4 pine was up 10.0% plus while 2x6 pine increased about half as much.  Wide-width 2x12 in 16’ lengths were up a whopping 22.4%.  Rain in the south is hampering logging for wide products.
  • The long-awaited drywall increase took hold in April adding on average 6.5%-7.4% to most drywall boards. 
  • Vinyl soffit added 2.2% on increased pricing from manufacturers.

The challenge for pricing and this month’s increase is whether or not it has legs.  Some believe (and history in recent years has indicated) that April price increases have failed to go into May and June.  This year, especially with a milder winter, there is a belief that the northern areas will have a lackluster spring building season.  This could prove detrimental to propping up pricing.  The continued economic struggles in the oil patch economies could damper home sales as summer heats up.

One area that may see some price appreciation is roofing.  Bad weather and hailstorms are creating roofing demand in Texas as well as many areas throughout the south.  This year, spring and summer price increases in roofing could actually stick and manufacturers may be starting to be in charge again—we will see.

Overall, builders should be mindful of the increases, include them in their bids, and watch for specific increases in certain products.  Let’s see if April’s price increases really have legs and if they can run past mid-May—I would not bet on it.

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 03/16/16

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Whole House Commodity Index - March 2016

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) continues to be stuck in a range that is below the level of August 2015.  The March increase of 0.6% to $29,639.90 might be the first sign that pricing is ready to go up or it could be just a seasonal springtime adjustment.  One thing is for sure, the momentum in commodity pricing that occurred in most of the spring seasons since the Great Recession did not translate into full-year price increases.  Depressed fuel prices and subdued housing demands could result in another springtime pricing repeat.

The following are the notable price movers in the Index since mid-February:

  • Foundation rebar was down 4.4%.
  • CDX pine was up 3.9% while OSB sheathing added 3.2%.
  • Narrow width pine was flat with wider width 2x12s adding 7.0%.
  • 2x6 spruce added 3.9% while 2x4 dimensional spruce increased 7.5%.
  • Spruce studs added 7.3% from their declines in January and February.
  • Show specials dropped insulation pricing 3.7%, with house wraps giving back 2.2%.
  • Interior door units were up less than 2.0%.
  • Manufacturers in drywall and steel studs have announced increases of 10.0% plus for April.  It remains to be seen if the market has enough strength to support those increases.  With lower fuel costs and depressed markets for many commodities, these increases could be harder to justify and hold onto—time will tell.

As with most spring seasons, prices generally move up.  Thus far, the increases have been somewhat tempered—there is no heavy run-up as in busier years.  April and May will be good indicators if these markets have legs to run.  Builders should update quotes and probably pad material for projects later in the year.  This is a good time to keep close to your building supply professional and dust off your price escalation clause in your contracts.

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 02/15/16

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Whole House Commodity Index - February 2016

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) declined in February by .3% to $29,462.33 as commodities and lowering fuel costs pressured most commodity pricing downward.  The vast majority of the items on the Index stayed flat and only five items eked out minor gains.  While some manufacturers and mills would like to increase pricing, most are having a hard time making anything stick.

The following are the notable movers since mid-January:

  • Rebar declined 2.2% as steel prices search for a firm bottom;
  • OSB sheathing declined 3.8% while CDX pine gave back 1.6% — demand and weather seem to be the biggest issues;
  • Dimension spruce declined 1.5% while 2x4 SPF studs added 2.1%;
  • Wide width pine was flat with narrower widths giving back 1.3% to 1.5%;
  • Architectural shingles retreated 2.8% as winter buys and the search for customers are creating deals; and
  • Doors were up 3.0% as manufacturers are trying to make a price increase stick.
  • Mid-February weather is very harsh in the northern regions of the country and pricing will remain flat to down as long as the inclement weather persists.  As the spring thaw occurs, pricing should rise but continued concerns over the stock market, mortgage availability, and collapsing commodities could temper any increases.  Builders should expect pricing to go up in the next month or so, and bids completed today may be too low in April.  Plan accordingly and protect yourself.

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 01/18/16

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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. .

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