March 2019 Whole House Commodity Report

WHOLE HOUSE COMMODITY INDEX – March 2019

by Don Magruder, CEO of RoMac Building Supply

The RoMac Building Supply Whole House Commodity Index (Index) increased an anemic 0.3 percent to $33,854, primarily on an announced $15 per thousand yearly increase on drywall, which may or may not stick. As I pointed out last month, housing reports nationwide continue to be unimpressive and very mixed. The housing market fell off the cliff in December and has been very slow to rebound.

The wood commodity markets are faltering and everyone in the commodity industry is quick with weather reports. Let me report some headline news—in January and February it normally snows and gets cold up North. We are in the middle of March, and reality will soon hit most builders that the housing market is not as enthusiastic as last year.

Here are the price movers for the last 30 days:1.

  • Foundation rebar gave back 1.2%.
  • CDX pine plywood added 1.0% while OSB only managed an increase of 0.4%.
  • 2×4 yellow pine was down 3.9%; 2×6 pine down 9.7%; however, 2×12 pine was up 5.7% on logging issues due to weather—it also rains in the South.
  • 2×4 dimensional spruce dropped 6.3% while 2×6 spruce gave back 7.6%. Spruce studs conceded 3.6%.
  • Although trusses added 2.2% on higher priced inventory, that will not hold with a slipping market.
  • LVLs gave back 8.4% on lowering demand.
  • Drywall was up 4.9% to 6.5% (depending on type) due to their annual increase, which I am doubtful will stick.

From mid-March to the end of April is normally the time in which prices escalate because of the spring building season. That hasn’t happened, and concern is starting to build. If these wood commodity markets continue to retreat the next 30 days, I am concerned this will be a bad harbinger of the housing market for 2019. While builders enjoy lower pricing, a lowering commodity market is a true indication of the housing market.

Builders should be mindful prices may increase over the next month or so. However, I don’t see huge runups in pricing because demand is tempered thus far, and the housing numbers are not showing much encouragement. As an industry, we need more demand and less excuses with weather reports. The next 30 days might be the precursor for 2019.

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 at rebecca.ballash@romaclumber.com.