July 2022 Whole House Commodity Index

By Don Magruder

The RoMac Whole House Commodity Index (Index) for mid-July 2022 dropped 3.2 percent to $53,041 primarily on falling prices in sheathing which have reversed course in the last week. This Index is 4.1 percent more than last July, and while this percent increase sounds encouraging, builders should understand that every item on the Index but 4 are considerably up. In fact, most items are double-digit percentages up.

So, the obvious question is, “why is the Index up only 4.1 percent compared to last year if everything else is more than double digits?  Here are the four reasons why:

  1.  CDX pine plywood is $18.94 per sheet less this year
  2.  OSB sheathing is $19.68 per sheet less this year
  3.  Foundation wire mesh is down $15 per roll
  4.  Roof trusses are down 30.8% or $2,436.78 less on lower pine pricing and better availability.

The concerns for builders are that a bad hurricane season could reverse the CDX pine plywood and OSB sheathing pricing almost immediately, and it appears wood products may have bottomed out in price for the summer.  Prices have been rising the last couple of weeks. Builders should be very wary about dropping prices too quickly as these markets are tenuous at best.

Below are the significant price movers over the last 30 days:

  1.  Foundation rebar dropped 5.7 percent and wire mesh went down 16.7 percent on better availability.
  2.  5/8 CDX pine plywood gave back 19.9 percent while OSB sheathing retreated 18.3 percent.
  3.  Pine dimensional lumber was mixed.  2×4 pine added 3.6 percent, 2×6 pine is up 10.9 percent while 2×12 pine dropped 16.7 percent.
  4.  Dimensional spruce was up with 2×4 adding 15.0 percent and 2×6 gaining 10.1 percent. Spruce studs only added 3.3 percent over the last 30 days.
  5.  Roof trusses dropped 10.9 percent on lower-priced inventories.
  6.  2×4 borate lumber added 4.9 percent while 4×4-8 post jumped 5.3 percent.

Currently, the wood markets are firming, and unless buyers retreat with the Federal Reserve’s July rate increase, most believe a bottom may have been located.

Builders should note that large increases in drywall and roofing have been announced by manufacturers for August 1st, and this will affect the cost of building in the fall.  Plus, daily additional fuel and freight charges are being added by manufacturers across the building material supply channel.  Be wary of dropping prices.

With a fast-approaching hurricane season in Florida, this Index could quickly move up.  Having a price escalation clause in all contracts remains a good idea.  Strap in and hunker down, the next few months could get bumpy.

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

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