December 2022 Whole House Commodity Report
By Don Magruder
The RoMac Whole House Commodity Index (Index) for mid-November 2022 continued its decline as the holiday season, coupled with emerging winter weather and a national softening housing market, pressed wood commodity prices downward. The Index dropped 2.2 percent to $48,814 since last month, and wood commodity markets are shadowing numbers at pre-pandemic levels. As compared to last December, the Index this month is 7.5 percent lower, which is primarily due to the price capitulation in wood products. Most other non-wood items on the Index are higher than last year. This suggests to me that wood commodities are probably close to a bottom.
Here are the notable price movers since mid-November.
Foundation metal accessories are down 12.0 to 18.5 percent as containers in rod chairs and loop ties have hit the ports. There are oversupply issues now.
Foundation rebar added 6.8 percent as commercial and industrial construction remains good.
Poly film prices dropped 12.2 on abundant supply.
CDX pine plywood dropped 1.2 percent but OSB sheathing capitulated 29.2 percent on production exceeding demand.
Pine pricing was mixed with 2x4s dropping 6.2 percent while 2×12 pine added almost a percent and 2×6 pine giving back 2.6 percent.
Dimensional spruce was down 5.6 to 8.7 percent while spruce studs gave back 11.1 percent.
The first signs of weakness in fasteners appeared as some anchors gave back 11.2 to 16.2 percent.
Pressure treated 4×4 post retreated 10.8 percent.
Price capitulations will remain slower to happen in other sectors as labor costs continue to escalate and natural gas prices remain stubbornly high. While some relief has been seen in diesel pricing, the high cost of drivers and maintenance are keeping freight costs high.
Many suppliers and wholesalers are trying to turn inventory into cash by year-end, and this is creating low inventories on the ground. Prices could firm if ground-level inventories get too low and suppliers enter the market in unison after the first of the year. Despite softening housing demand, housing inventories remain low, especially in Florida, and this will keep the markets active. Don’t be surprised to see the housing market snap back some in the spring as the Federal Reserve slows interest rate increases and the market stabilizes. Builders would be advised to not use today’s pricing for spring projects- markets can change quickly.
I would like to wish everyone a very Merry Christmas and a Happy New Year and thank you for reading the Whole House Commodity Index. Enjoy time with your family and friends this holiday season.
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.