April 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - April 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for April 2018 was virtually flat since March.  However, there was plenty of movement within the Index indicating that the inflation run in commodities in building supplies is not over.  The Index in mid-April settled at $35,134, which is only 0.3 percent more than March.  This small increase marks the first time that pricing in the building material sector slowed down this year.  Although the flattening in pricing is blamed on a lingering winter in the Northeast and Midwest, the housing demand equation could be softening as pricing becomes unbearable for many prospective homebuyers. 

A dive into the actual costs that make up the Index demonstrates the turmoil.  Here are the main movers in the Index over the last 30 days: 

  • 20x100 rolled foundation poly retreated 11.6 percent on spring buys. 
  • 5/8 grade 40 rebar added 16.1 percent on Trump steel tariff concerns.  Wire mesh dropped 1.8 percent on price resistance by the market. 
  • 5/8” CDX pine plywood dropped 5.4 percent on weaker demand while OSB sheathing manufacturers were able to bolster pricing up 6.0 percent on managed supply.
  • Simpson hurricane ties were up 25.0 percent on Trump steel tariff concerns. 
  • 2x4 spruce was flat to down 0.5 percent while 2x6 spruce dimensional lumber dropped 4.1 percent on softening demand.
  • 2x4-92 5/8 #2 spruce studs were flat trying to find a direction in the market.
  • 2x4 dimensional pine dropped 8.5 percent, 2x6 pine was flat, and 2x12 pine retreated 6.4 percent.  
  • The decline in pine pricing offset the 15.0 percent increase in metal plates as truss pricing retreated a miniscule 0.3 percent. 
  • Treated 4x4-8 posts increased 10.1 percent as the treaters entered the spring market. 
  • Insulation board increased 6.7 percent as did rolled insulation, which added 3.7 percent.
  • Metal ridge vents were up 25.0 percent and aluminum drip edge was up 5.1 percent on Trump tariff concerns. 
  • Garage Doors were up 4.2 percent on increased steel costs related to tariffs.  Garage door operators added 5.1 percent because of increased manufacturing costs. 

What is spooky about this Index for the month is that core inflation, which typically does not fluctuate, as wood commodities increased within the Index.  Increases in steel foundation rebar, garage doors, insulation, and roofing metal were offset by declines in wood commodities that could be affected by weather.  It would not be out of the question to see a rebound in wood commodities over the short-term as spring and summer take hold.  This could expose a real pop in pricing.  

Builders should be aware that a real base amount of inflation was built into the housing costs over the last 30 days, which will be exposed as wood commodities rebound.  This makes future pricing difficult.  Unless the market demand declines dramatically expect the Index to remain firm and retain most of the increases it has garnered since the first of the 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. .

March 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - March 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for March 2018 increased 3 percent to $35,046.02, as tariffs and trade issues involving Chinese steel and Canadian lumber continue to angst the commodity markets.  The surprise announcement caught many off guard, as they believed the threat of steel tariffs was being overblown. The 25 percent steel and 10 percent aluminum tariffs change the pricing dynamics of the residential housing market, because most products in the housing sector rely on imported steel and aluminum.  

The Index for March is at a record high and there appears to be little signs of abating. Considering the following facts, the building supply sector is overheating, and the inflation demon is truly at play.

  • The Index is up 7.4 percent since December 2017.
  • Since December, rebar is up 44.2 percent; wire mesh is up 9 percent; 2x4-16 yellow pine is up 32.1 percent; 2x4- 92 5/8 spruce studs are up 14.5 percent; 5/8 CDX is up 17.1 percent; trusses are up 13 percent; 2x4-16 spruce is up 18.4 percent; and 1/2”4x12 drywall is up 14.6 percent.

Although we are in the dead of winter, the inflation since the first of the year has rivaled any hurricane period. 

In regards to this month’s report, the Index continued to increase over the last 30 days, and here are the notable movers since mid-February:

  1. Wire mesh is up 2.4 percent and rebar is up 7.4 percent.
  2. 2x4-16 pine is up 6.5 percent while 2x6 pine added 2.4 percent and 2x12 pine declined 2.4 percent.
  3. 2x4 spruce studs added 6.9 percent while 2x4 spruce increased less than 2 percent and 2x6 spruce was down slightly.
  4. CDX plywood added 10.6 percent while OSB sheathing jumped 9.8 percent.  
  5. Roof trusses edged up 5.2 percent on higher wood costs.
  6. New price increases by most roofing manufacturers during the first week in March added almost 5 percent to shingle pricing.
  7. Spring has brought inflation to 4x4 treated posts, which added 15.1 percent.
  8. Aluminum drip edge and vents were up almost 6 percent on higher demand and cost—this was before the tariff announcement.  Since the tariff announcement, proposed increases have been announced upwards to 25 percent.
  9. Windows were up 4.5 percent on increased cost in manufacturing.

Substantial inflation has been seen in the building supply sector over the last 30 days, and there appears little momentum for lower prices anytime soon.

The steel and aluminum tariffs are not completely reflected in these costs, which is disconcerting.  Even worse, real supply concerns are heightening every day. The sudden, unexpected announcement of tariffs by the President froze the import markets immediately and orders were cancelled by exporters.  Because uncertainty remains as to which countries will be affected and the unknown retaliatory responses of countries being tariffed, the supply chain is broken. This may result in shortages of product later in the spring and summer. 

Availability angst is growing with building supplies that depend on steel and aluminum.  Certain foundation metal products have already become almost impossible to find and concerns about nails and fasteners are growing.  Demand for metal roofing accessories has already stressed those supply chains and manufacturers are announcing immediate 25 percent increases with warnings of supply disruptions.

The price increases are coming and nothing barring a total collapse of the housing market is going to stop them.  Builders should work with their vendor partners to plan needs and ensure adequate supplies are available when they need them.  Allocations may come in certain sectors, and supply availability to customers may be dependent on prior buying histories.

Currently, the markets are in a highly inflationary period and the markets are extremely volatile.  Now is the time to include a price adjustment clause in your contract. If you would like one based on this Index, please email Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. for a copy.

Builders today should update bids and be mindful of future project pricing.  Just as important, communicate future needs with your suppliers. Now is the time when true business partnerships will pay the most dividends.

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. .

February 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - February 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for February 2018 increased a whopping 2.8 percent to $34,030.08 as the January spark in the commodity market raged into a full-fledged flame in February.  This type of increase in the dead of winter is unusual—is this a prediction of what’s to come this spring or will this price run flame out when the weather turns warmer?  Little doubt, it depends on housing starts and that is the question.  The steep decline in housing starts in December coupled with only a 2.4 percent increase in homebuilding starts in 2017 is leading some to pause and see if this price runup can be sustained.

One big element in the recent price increases is trucking.  Prices are going up and availability is being stretched with new record keeping.  This will only grow worse during the spring as agriculture competes for available trucks.

The big price movers in the Index from mid-January to mid-February were:

  • Foundation rebar was up 12.1 percent on the United States trade policies and tariffs.
  • 2x4 yellow pine added 12.1 percent while 2x6 was up 7.9 percent and 2x12 pine added 19.4 percent.
  • The heavy increases in pine pricing forced truss prices up 5.0 percent.
  • Spruce pricing was also up—2x4 studs added 3.6 percent, 2x4 spruce increased 6.1 percent, and 2x6 spruce posted the smallest gain at 1.5 percent.
  • CDX pine plywood increased a strong 7.8 percent while OSB sheathing added a whopping 16.8 percent.  Mills are doing a much better job managing inventories to demand.
  • Exterior doors were up 3.0 percent on higher costs from manufacturers.
  • Engineered wood was up 18.0 percent on increased production cost.

With all the chaos in Washington, D.C., the threat of tariffs, interest rate concerns and changes in the tax law (which hurts secondary housing), the housing market could weaken.  In my view, there is just a likelihood pricing in April could be lower than February.  The next two months of housing numbers will be the best indicator of pricing for the year.

To be safe, builders should beware of pricing projects for March and April with January’s pricing as warm weather and new tax cuts could make the markets volatile.  Now is the time to include a price adjustment clause in your contract.  If you would like one based on this Index, please email Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. for a copy.

Good luck and Happy Valentines Day!

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. .

January 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - January 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

 

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for January 2018 reversed two months of decreased pricing by adding 1.4 percent to $33,109.  This sets a tone that the new year could be fraught with price increases throughout the supply chain. Many in the industry are optimistic that the housing recovery in the United States, fueled by lower tax rates, will continue and should begin in earnest once the winter weather eases.  

Overall commodity and building material pricing for the fourth quarter was propped up by hurricane repairs from major storms in both Florida and Texas, as well as the Canadian-United States Softwood Agreement trade dispute.  Both appear to have a much lesser influence going into 2018, as hurricane repairs are waning and the United States finalized its duties on Canadian lumber earlier in the month.  

The primary price movers for the mid-January Index update were the following:

  • Wire mesh increased 6.4 percent and rebar added 19.4 percent as low cost imported steel evaporated out of the market place.  Continued tariffs and trade disputes in steel could accelerate pricing in 2018.
  • CDX pine plywood dropped 1.8 percent while OSB sheathing added 3.5 percent.  The winter weather and the market balancing itself are probably the best reasons for the cross in pricing.
  • Only 2x4 yellow pine dimensional increased in price and it was up 1.7 percent.  2x6 pine printed down 14.4 percent and 2x12-16 pine dropped 2.3 percent.
  • 2x4 dimensional spruce was up 9.8 percent on freight and duty issues followed by 2x6 spruce, which added 6.3 percent.
  • Truss pricing rose 2.3 percent on higher costs for 2x4 pine and increased fuel charges to have the lumber delivered to the plants.
  • Regular drywall added $30 per thousand while specialty drywall boards increased $50-$100 per thousand.  The net effect on board was 10.1 percent to 14.6 percent up
  • Tile backer added 7.5 percent on increased costs.
  • Vinyl soffit was up 11.0 percent as manufacturers raised yearly pricing.

Freight issues will be a huge influence on pricing this year as drivers’ wages, driving regulations, and fuel prices are poised to increase costs and limit further availability.  Expect lead time to extend somewhat as manufacturers may struggle to find drivers for loads.

2018 has the makings for a strong year in housing if the chaos in Washington D.C. settles down and an unexpected crisis is not created.  The fundamental looks okay except for the affordability issue, which grows worse daily.  Ultimately, the lack of affordable housing could be the extinguisher of any long-term growth in the housing market.  

Builders should beware pricing projects for March and April with January’s pricing as warm weather and new tax cuts could make the markets volatile.  Now is the time to install price adjustment clauses in your contract.  If you would like one based on this Index please email Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. for a copy.

Until next month, stay warm and get ready for a busy 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. .

 

 

 

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