By Don Magruder
The RoMac Building Supply Whole House Commodity Index for mid-July 2023 increased .9 percent to $49,382 as OSB and CDX turned up in price to offset declines in 2x4 and 2x12 pine. Overall, the markets are beginning to trend higher as nationally unexpected strength in housing starts has encouraged builders. A temporary pause by the Federal Reserve interest rate hikes is providing some hope for normalcy in the markets, and a continued shortage of housing not only nationally but in Florida is keeping demand solid.
The most concerning aspect of the Florida housing market is the availability of labor. New immigration laws implemented by the state of Florida may be creating delays in housing production as builders continue to struggle with schedules. The hesitancy in blaming the production slowdowns on immigration is the hot, wet weather that has been affecting the state. If the slowdowns persist or grow worse after the weather improves this could indicate real problems for builders.
Here are the main price movers over the last 30 days.
Foundation wire mesh dropped 2.6 percent while rebar gave back 2.8 percent.
The price of 3000# concrete increased by 6.0 percent on continuing cost increases in raw materials and trucking.
CDX plywood added 2.5 percent while OSB sheathing has gotten much tighter in supply with prices increasing 32.6 percent- almost $4 per sheet.
2x4 pine dropped .9 percent while 2x12 pine gave back 21.2 percent. Despite those drops in pine, 2x6 pine added 31.6 percent. The pine markets are being driven by specific demand by size.
The spruce markets increased significantly with 2x4- 92 5/8 studs adding 14.4 percent, 2x4 dimensional spruce increasing 16.3 percent, and 2x6 spruce adding 9.1 percent.
2x4 pine borate dropped .9 percent while 4x4 treated 5.0 percent.
Trusses dropped 7.1 percent on lowered 2x4 pine pricing over the last 6 weeks, but those numbers are probably near the bottom.
House wrap dropped 3.1 percent on ample supply.
If not for the drop in 2x4 pine and trusses the Index would have made much larger gains. A slight turn-up in 2x4 pine prices and the full impact of this month’s sheathing increases will be felt.
The waters off Florida are near record high temperatures and hurricane season is upon us. With the increases in sheathing and the tight supply, I see little chance of these markets abating and next month, every shingle company has announced price increases. There remains a lot of uncertainty, but my belief is the markets will be higher in the next few months as the market continues to improve. Hurricane season could be a real wildcard.
My recommendation is that builders should dust off their price escalation clause as they may be dealing with higher building material pricing and potentially much higher labor pricing if the Florida immigration issue is real. The cost of building homes could be going up in the next month or so- be prepared.
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.