April 2021 Whole House Commodity Index
The RoMac Building Supply Whole House Commodity Index (Index) for April 2021 hit another record high as pricing in all sectors of the market continue to increase almost unabated. Last month, I wrote that I expected the markets to worsen before they improve, and this month’s movement confirms my prediction.
The Index jumped 5.2 percent to $52,302 with steel and Poly-PVC related products joining the wood and sheathing price increases. It appears market price limits will be tested in a housing market, which has about a one-month supply of inventory coupled with a demand equation that grows stronger every day. Material shortages and delays are growing more commonplace in multiple sectors in the supply chain. It appears that material shortages in steel, plastic, and concrete raw materials are on the horizon. Builders who have tried to wait out these price increases out are now relenting as cash and building timelines squeeze production.
The following are the notable price movers in the Index over the last 30 days:
- Wire mesh increased 12.0 percent as 5/8 rebar settled down just 1.4 percent. Predictions from suppliers remain strained for foundation materials.
- CDX pine plywood was up 20.2 percent while OSB sheathing added 10.3 percent. Despite prices hitting unimaginable levels, materials are tight in supply.
- Metal connectors increased in the 12.0 percent range as manufacturers took increases for higher priced steel.
- 2×4 pine dropped 10.5 percent and 2×6 pine dropped 11.7 percent; however, 2×12 wide-width pine increased 9.0 percent. Although 2×4 and 2×6 got ahead of the market in pricing, they flattened and then increased over the last week.
- 2×4 and 2×6 dimensional spruce increased 10.4 percent and 2×4-92 5/8 SPF wall studs added 7.9 percent. Supply for spruce appears to be tightening again.
- 4×4 treated posts dropped 2.0 percent and 2×4-16 treated borate gave back 9.8 percent on lower raw material costs.
- Although trusses were down 0.5 percent on lower 2×4 costs, lead times and availability for trusses is a challenge statewide. Many truss plants in the state of Florida have stopped taking on new customers, especially down in South Florida.
- Engineered joists increased 39.0 percent on much higher costs and waning availability.
- House wrap added 8.0 percent on increased pricing for resins.
- Drywall pricing increased 6.7 to 8.8 percent on new costs from manufacturers.
- Roofing increased 5.6 percent on announced price increases by manufacturers. Supply remains in shambles and many suppliers have limited color offerings.
- Garage Doors added 17.7 percent on increased pricing for steel. In addition, garage door openers increased 6.0 percent on increases in raw material costs.
- PVC trim boards jumped 25.9 percent and vinyl soffit increased 16.6 percent on higher resin costs and potential shortages. J-channel trim was up 4.3 percent.
That is a lot of pricing activity! Unfortunately, based on announcements from manufacturers, many of these product lines have additional increases pre-announced for the summer. Plus, supply issues and concerns are growing daily as the virus resolves itself and the economy starts roaring back to life.
These price increases will not abate until demand cools significantly and labor becomes more plentiful. I expect prices could moderate in the months of May and June if jobsite delays for windows and other products continue to persist. Long-term, demand will remain strong with the issue of labor not quickly resolving itself. Builders should plan on higher pricing in the short-term.
Planning and ordering items in stock are the best course for builders. Specialty products and special-order items will wreck production schedules. Stay ahead of the price increases on your bids by staying informed and updating pricing frequently.
It is imperative that you have a Price Adjustment Clause in your contracts to protect yourself regarding pricing. RoMac Building Supply offers, for free, a Price Adjustment Clause for Contract, which is linked to this Index. It can be obtained by contacting Rebecca Ballash through our Contact Us page.
The RoMac Building Supply 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 RoMac Building Supply in Central Florida. Go to romacfl.com to sign up for the Index and other free market reports. To sign up for this information via email, contact Rebecca Ballash through our Contact Us page.