June 2020 Whole House Commodity Index

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The RoMac Building Supply Whole House Commodity Index (Index) for mid-June rose 3.1 percent on surging wood commodity pricing. The Index for June settled at $35,099, which is 6.7 above January’s Index, 8.0 percent above last June’s Index, and just 3.7 percent below the Index’s record high in June 2018. Certain items, such as specialty truss pine lumber and studs in specific lengths and sizes, have been harder to find as most lead times have expanded. Shipping companies are demanding premiums for quick ships.

The following are the notable price movers for the June Index:

  • Wire mesh added 2.7 percent while Rebar remained flat to down a percent.
  • 2×4 #2 yellow pine was up 7.1 percent while 2×6 added 9.3 percent and 2×12 picked up 4.7 percent.
  • Dimensional spruce added 4.0 percent to 2×4 and added 5.7 percent to 2×6.
  • Spruce 2×4-92 5/8 studs surged 9.9 percent.
  • 4×4-8 treat posts added 25.4 percent and 2×4 treated bounced 6.5 percent higher.
  • CDX pine plywood added 7.8 percent while OSB jumped 4.3 percent.
  • Architectural roofing shingles dropped 1.7 percent on a small market adjustment.

Although there was significant movement in the wood commodities to the upside, the rest of the supply chain contended with reduced capacity because of issues related to COVID-19, which has caused huge backorder issues in windows, doors, and other products for the home. There is an expectation that pricing in other categories will increase as burdens from COVID-19 pressure manufacturers.

Whether the federal, state, or local governments reopen an area is immaterial. Until consumers feel safe and the Coronavirus issue is resolved expect the reins to be applied to the economy. Even in Florida where the COVID-19 pandemic and recent civil unrest should produce a migration from large cities, the economy must still function properly to see a significant uptick. Little doubt, Florida will be a shining spot in the country if the Coronavirus issue does not get too bad.

It appears the wood commodity markets are close to topping out and may meander at these levels for a few weeks. Demand directly related to increased consumer activity will dictate the market direction. This will be tied directly to the Coronavirus outcome as it relates to science, numbers, and a vaccine. Expect some high and lows over the next few months, especially as the country heads into hurricane season.

If you thought the ride was about to ease up—hold on—there are more bumps to come.

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.  To sign up for this information via email, contact Rebecca. For great videos and Don’s weekly column, go to the Around The House website to subscribe to our YouTube channel and weekly updates.