October 2016 Whole House Commodity Index

October 2016 Whole House Graph


by Don Magruder, CEO of RoMac Building Supply

Home builders dodged a large bullet on October 6, 2016, when Hurricane Matthew wobbled east about 30 miles, just off Florida’s coast, and averted what could have a been a natural disaster of epic proportions. A wobble or veer west by Matthew would have resulted in billions of dollars in damage, massive strains on the supply chain, and even worse a labor shortage like none other. New home construction in Florida could have easily been shut down as most skilled labor would have relocated to the disaster zone. Although the flooding and wind damage in certain areas on the Florida and Carolina coastlines was severe, it is far from widespread.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for October 2016 has a hangover from Matthew as sheathing prices jumped. However, the winter season and U.S. presidential election should drag those prices down in short order. For October, the Index increased 0.6 percent primarily on the price increase in sheathings. Since the first of the year, the Index is up 5.2 percent, which is strong given the up-and-down nature of the housing market in the last few months.

The notable price movers for October were:

  • CDX Pine was up 6.6 percent while OSB added 4.8 percent.
  • Rebar was down 7.1 percent as wire mesh retreated 6.5 percent.
  • 2×4 yellow pine added 14.2 percent while 2×6 pine added 4.2 percent and wide width 2×12 gave back 6.3 percent.
  • Spruce studs added 2.2 percent and 2×4 spruce dimensional jumped 3.7 percent. 2×6 spruce was flat to down 0.4 percent.
  • Drip edge added almost 3.0 percent on continued increased in steel costs.

The market could retreat as hurricane season becomes less threatening.

Market signs and the time of year are not pointing to higher commodity prices. A wait and see attitude on many things in business is going on as Americans prepare to vote. One thing is for sure, a wobble east made this report much easier to write. Everyone is truly blessed.

The Ro-Mac Lumber & Supply, Inc. 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 Ro-Mac Lumber & Supply, Inc. 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.