October 2021 WHOLE HOUSE COMMODITY INDEX
Whole House Commodity Index
By Don Magruder
For the second straight month, the RoMac Whole House Commodity Index (Index) for mid-October 2021, increased in price after two months of significant declines from historically high pricing levels. Needless to say, mid-August was the bottom of the commodity markets, and as dealers and mills burn through the heavy inventories amassed during the summer, the demand equation for housing is once again pressuring prices upward. Over the last 30 days, the Index increased a whopping 6.1 percent to $46,402 which is now 1 percent above the January level and 10.9 percent above October 2020.
It is important to note that builders may feel better about pricing now as compared to mid-May, but the Index remains at a very high, inflationary level. The sneaky part of the Index is that during the time commodities collapsed in late summer, everything else like doors, windows, garage doors, and metal related products escalated in price. Also, products made with resins and silicone are now feeling high pricing pressure as these resources are harder to find.
As you look down the list of notable price movers for the month, most builders will be shocked by the huge price increase in wood commodities and sheathing. I hope these numbers are not what the great Yankee catcher Yogi Berra would say, “déjà vu again” regarding wood commodities.
Here are the notable price movers over the last 30 days:
1. 5/8” steel rebar was up 13.0 percent on increased demand and higher steel pricing.
2. 5/8” CDX plywood jumped a whopping 30.5 percent while OSB sheathing trailed with a 16.4 percent increase
3. Masonry stucco increased 1.3 percent on higher transportation costs.
4. Dimensional #2 yellow pine was up in all widths. 2×4 jumped 30.6 percent, 2×6 added 34.4 percent, and wide width 2×12 increased 29.0 percent. Higher grade truss lumber has become more difficult to source over the last 2 weeks as mills struggle with demand.
5. Continued trade issues and transportation rallied also the spruce markets. 2×4 #2 spruce added 20.6 percent while 2×6 spruce increased 23.2 percent. #2 spruce 2×4- 92 5/8” studs were up 18.2 percent with specialty length studs adding more.
6. Increased pine and labor costs pushed up truss pricing 5.3 percent with more increases predicted on steel plates.
7. 4×4-8 treated posts added 7.1 percent and 2×4 treated jumped 24.6 percent.
8. Interior pocket frames added 7.1% on higher steel, labor, and wood costs.
9. Synthetic felt added 6.5 percent as all resin-based items felt pressure.
10. Drywall pricing was up 4.0 percent on higher trucking costs.
11. Windows added 10 percent across the board on higher glass and resin cost as well as an overwhelming demand issue.
12. Both interior and exterior doors increased 2.0 to 5.0 percent on higher moulding, jamb, and labor pricing.
13. Garage Doors increased 8.0 percent on increased steel pricing which is increasing monthly.
14. PVC trim boards jumped 14.2 percent on high resin costs and supply issues.
The future vantage point of most items shows continued pressure on pricing while demand for housing escalates as the pandemic resolves, and the home selling season in Florida ignites.
Last month my advice to builders was, “The bottom line – expect pricing to increase, lead times to expand, and labor to remain tight. Builders who will do the best are those who are planning needs well in advance.”
This month’s advice is read last month’s advice. Wood commodity pricing will continue to firm until the holidays and at this point, no one is predicting a near-term slowdown in housing demands with the backlogs being seen in trusses and windows. Builders should protect themselves with price escalation clauses in their contracts for the remainder of 2021.
Most in the industry, including myself, do not expect the wood commodity markets to go back to the record levels of late-spring and early-summer, but I must admit, the huge increases this month and the huge year over year increase in the Index gives me pause.
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 Keri Sudman at Keri.Sudman@RomacFL.com. For great videos and Don’s weekly column, go to www.AroundTheHouse.Tv to subscribe to our YouTube channel and weekly updates.