November 2021 Whole House Commodity Index
By Don Magruder
The RoMac Whole House Commodity Index (Index) for mid-November 2021 continues to increase for the third month in a row despite some easing in certain segments of the wood commodity markets. Increases in labor, transportation, and steel products continue to provide the inflationary pressures in most sectors. The Index increased 2.2 percent to $47,432 over the last 30 days, and while historically the wood commodity markets settle down around the holidays, manufacturers are starting to bombard suppliers with new year price increases and extended lead times. Expect the supply chain to remain volatile for the first half of 2022 and maybe beyond.
Below are the significant price movers for this month.
- Foundation poly added 1 percent while rebar and mesh remained flat. The problem is the foundation accessories which increased 12.5 to 15.4 percent, and many have become almost impossible to find with significant lead times and shortages.
- CDX pine plywood dropped 8.2 percent while OSB remain completely flat. The holidays should keep these numbers trading in a narrow range.
- 2×4 dimension spruce dropped 6.9 percent while 2×6 eased back 1.4 percent. Spruce studs added almost 1 percent. There are increasing concerns over spruce availability next year as a huge debate rage in Canada over the future of timber harvesting in the west. If new guidelines are passed by Canadian regulators, millions of acres could become off limits for harvesting.
- Dimensional pine lumber was up with 2×4 pine demand pushing pricing up 18.3 percent while 2×6 added 2.1 percent and 2×12 jumped 2.6 percent. Unfortunately, in the south 2×4 demand is being driven by heavy needs from the truss industry.
- Roof trusses added 18.3 percent on higher wood and steel pricing as well as continued increases in labor. Hourly rates for truss plant employees are surging.
- Most metal connectors were up 12.0 to 15.0 percent as steel prices continue to rise unabated.
- Pocket frames added 5.5 percent on higher steel pricing for tracks and connectors and almost no availability.
- Vinyl soffit prices added 12.4 percent on increased raw material pricing and poor availability.
- Cement siding added 2.4 percent on higher freight costs.
As you can see, inflation continues in most sectors which is driving the total price of the home upward.
As I peer into 2022, it is not looking very promising. Honestly, it seems to me that costs will continue to rise, supply chains will remain disrupted, and it may get worse for the coming year. With housing demand continuing to strengthen, I see a demand and capacity equation not in balance to support a settling of the markets. Builders should include price escalation clauses, secure pricing, avoid custom and special products, and line up suppliers and subcontractors. You will probably be underwater in bids if you use today’s pricing for projects in mid-spring.
Happy Thanksgiving to everyone and please keep in mind those less fortunate.
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 the Whole House Commodity Index and other free market reports click the button below.