May 2016 Whole House Commodity Index

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Whole House Commodity Index - May 2016

By Don Magruder

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for May increased 2.8% to a new high of $31,002.18, primarily on the strength of the lumber and sheathing market.

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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. .

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