January 2021 Whole House Commodity Index

The RoMac Building Supply Whole House Commodity Index (Index) for January 2021 hit a record high of $46,011 which translates to a 15.1 percent increase from December 2020.  The first of the year usually includes the reset of freight and contract pricing along with yearly increases, and this year, the price increases are almost across the board.  Coupled with another spike in commodity prices, no wonder the Index hit record levels.  

Here is the spooky aspect of these numbers. Our historical trends show that mid-January is typically one of the lowest time-periods of the year for the commodity markets as the hangover of the holidays and cold winter weather slows up demand.  While the spruce markets in the last week have flattened, the other markets remain hot.  Once the new President is inaugurated and the chaos in Washington D.C. settles, there is a possibility these markets could start a spring price run up if the winter weather abates.

The following items on the Index are the notable price movers:
  • Foundation wire mesh was up 5.3 percent and rebar jumped 17.8 percent as domestic and foreign providers announced higher pricing on tight supply.  It appears foundation metal could be heading toward allocations. 
  • CDX Pine plywood increased 27.2 percent and OSB sheathing added 14.5 percent.  Supply is tighter in CDX and both items are near record highs.
  • Roof truss prices increased 51.6 percent due to soaring pine pricing and a truss lumber market which is demanding premium pricing on specialty lumber.  Plus, metal plate pricing added 10 percent and COVID-19 quarantines are making labor scarce and more expensive.  Expect higher pricing and longer lead times on trusses for the next few months. 
  • Pine dimensional pricing had unimaginable increases in price.  2×4-16 #2 pine jumped 63.2 percent, 2×6-16 pine added 70.2 percent and 2×12-16 pine soared 66.3 percent.  Increases in contract pricing, freight charges, premiums for availability and the upward momentum of the market are making pine numbers very challenging.
  • Dimension spruce for the month increased moderately.  2×4 spruce added 7.6 percent while 2×6 spruce jumped 9.6 percent.  2×4- 92 ⅝” studs added 13.8 percent.  In normal times these increases would be substantial, but not in the context of the current market.
  • 2×4 pine borate lumber added 66.2 percent and 4×4-8 treated posts are making a huge spring price run up of 68.6 percent as treaters buy inventory. 
  • Most screws and connectors are phasing in 2 to 5 percent increases with more forecasted as metal pricing continues to increase.
  • Insulation added 5 percent for a yearly price increase.
  • Shingle pricing was up 2.2 percent with limited availability.
  • Drywall pricing was up on average 9 percent due to increased pricing from manufacturers.
  • Interior door units were up 7 to 11 percent with a 15 percent increase in slab pricing.
  • PVC trim boards added 3 percent on new yearly pricing.

The litany of New Year price increases comes with another issue- limited availability.  COVID-19 delays are accelerating as the virus is ravaging manufacturing facilities.  Social distancing and outbreaks are slowing production dramatically and unfortunately, some health experts are predicting that the new COVID-19 British Variant will spread quickly in Florida and make it a hot spot.  If this occurs, just getting materials to the jobsite could be an issue.

The key to getting pricing and supply back in order is resolving the COVID-19 virus.

Builders should prepare and plan like never before.  Expect high prices and expect material delays and do yourself a favor- avoid ordering special, special products.  Relying on manufacturing for timely delays over the next few months will be risky.

Protect yourself regarding pricing.  It is imperative that you have a price escalation clause in your contracts.  We offer, for free, a clause linked to this Index and it can be obtained by contacting Rebecca Ballash through our Contact page. 

If mid-January holds historical norms and this is the lowest time-period of the spring, builders should beware.  I expect the markets to get uglier before they get better.  

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 on our Contact Us Page. For great videos and Don’s weekly column, go to www.AroundTheHouse.Tv to subscribe to our YouTube channel and weekly updates.