March 2023 Whole House Commodity Report
By Don Magruder
The RoMac Building Supply Whole House Commodity Index for mid-March 2023 continued to stabilize and cement a bottom with a minor drop of .1% from the prior month. The Index priced at $49,381 which is a whopping 25 percent lower than just a year ago, but it is only 3/10ths of a percent lower than two years ago in 2021. This indicates to me that there is little chance these numbers will go much lower as labor costs continue to escalate and the lack of skilled workers persists in the construction industry. The next few months in the economy regarding interest rate increases and employment numbers, as well as the financial system’s health, will determine if the housing market rebounds quickly.
Here are the notable price movers from the prior month, but for the most part, the markets were quiet with less volatility.
- CDX pine was basically flat, only adding .6 percent while OSB sheathing added only 1.8 percent.
- Dimensional pine lumber was very mixed. 2×4 pine added 1.7 percent and wide-width 2x12s remain short adding a whopping 25.6 percent. 2×6 pine dropped 17.1 percent as that size was in the least demand. Treating season along with logging issues for the wide widths were the main catalysts.
- Dimensional spruce was down overall with studs giving back .9 percent while 2×4 retreated 11.4 percent and 2×6 dropped 10.0 percent. The market is setting up a trading range that will be closely governed by demand through the spring.
- Trusses added 4.7 percent on continued cost increases in labor and two months of solid increase in 2×4 pine.
- Treated 4×4-8 pine jumped 19.1 on seasonal spring demand while 2×4 treated added 1.5 percent.
- Foundation rebar retreated 5.9 percent on better supply this month.
- Door units both interior and exterior retreated on average about 1 percent due to lower moulding and jamb pricing.
- PVC trim boards dropped 16.9 percent on increased market competition and special spring buys.
As you can clearly see there were a lot of ups and downs which offset one another, and I suspect that will be the general trend.
One thing to keep in mind. The new higher interest rate environment is raising the cost of doing business at all levels and along with continued labor challenges, the will and ability of many manufacturers to drop pricing will be slower. The comparisons to last year are ugly due to deflation and companies will be pressured to manage costs that may be stubbornly unwilling to drop because they can’t afford to retreat.
Builders should monitor both weather and housing demand. Supply chains are not ramping up because of uncertainty and a surge of business could send prices surging quickly. Be careful quoting long-term projects for late spring and early summer starts- the pricing environment could be much different. Until then, expect more ups and downs with offsets.
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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