By Don Magruder
The April 2024 RoMac Building Supply Whole House Commodity Index increased .2 percent to $51,248 which marks the second month of unimpressive pricing activity as the markets struggle with interest rates which remain fixed, and continued market uncertainty. During the fall season, most housing analysts were hopeful that by April there would have been at least one interest rate cut with several more on the table for 2024, but currently, interest rate cut sentiments have shifted to one in the last quarter of 2024, or none as inflation remains stubbornly higher than the Federal Reserve’s target of 2 percent. Plus, uncertainty in the Mideast and higher-than-expected fuel costs are keeping enthusiasm in the housing market tempered. Most would agree that while the current housing market is not bad, so far in 2024 it has underwhelmed expectations.
The following are the notable price movers over the last 30 days.
Rebar added 1.5 percent as supply balanced with demand.
CDX added 4.7 percent following the huge price runup in OSB which added a whopping 24.0 percent since mid-March.
Yellow pine dimensional lumber trended downward with 2x4 dropping 12.1 percent, 2x6 down 9.9 percent, and 2x12 coming off 10.6 percent. Better weather in the south did not usher in higher demand.
Spruce failed to follow sheathings and retreated as did the yellow pine except for studs which added .5 percent on higher freight rates. 2x4 spruce dropped 3.7 percent and 2x6 spruce gave back .4 percent.
Overall declines in 2x4 and 2x6 pine brought truss prices down 3.7 percent.
Pine 2x4 treated dropped 10.1 percent while 4x4-8 treated post increased 7.2 percent.
Roofing shingles increased 3.1 to 3.7 percent as higher oil costs, trucking costs, and a general tightness in supply allowed manufacturers to push through an increase.
It does appear most builders and homebuyers are accepting the reality that interest rates aren’t going down anytime soon, and there appears to be a go-forward attitude in the market.
Three huge factors are at play which will continue to force improvement in the housing market despite the interest rate environment.
First, the four to five million housing unit deficit which exists currently in the country. Unless families plan to live in tents or with Mom and Dad forever, we must build housing.
Secondly, Americans are not patient and there is not an infinite time they will put off their dreams and lives due to interest rates.
Finally, the huge wealth transfer from aging baby boomers to their children will expand each year, and money will be available for housing.
In short, housing will be volatile for a time, but the fundamentals at some point will take over the housing market, and especially here in Florida, expect continued growth. There is a good chance you will see continued price and housing growth for the rest of 2024, but just not at the pace you would have predicted last year.
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.
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