By Don Magruder
The RoMac Building Supply Whole House Commodity Index for mid-June 2023 dropped 1.6 percent to $48,927 from the previous month, and for the year, all gains since December have been wiped away. The banking crisis, higher interest rates, and debt ceiling negotiations have created a lot of uncertainty in the first half of 2023. Accordingly, many home builders are looking for a stronger second half as housing inventories and availability remain very challenged because many homeowners are house-locked due to higher interest rates and increased valuations.
Over the last 30 days, the following items were the most notable price movers.
Foundation rebar was down 2.8 percent on improved supply.
5/8 CDX pine plywood dropped 5.4 percent after months of stability while OSB sheathing added a meager 1.4 percent.
Pine dimensional lumber was down and mixed by width. 2x4 pine dropped 16.0 percent after rallying for several months, 2x6 pine retreated 4.8 percent, and 2x12 pine continued its move up in price by adding 1.6 percent.
Spruce studs were basically flat, retreating .3 percent. while 2x4 dimensional spruce gave back 3.3 percent and 2x6 relented 6.9 percent. This week’s announced curtailments in British Columbia and ongoing Canadian wildfires are reversing these markets quickly, and many are expecting higher pricing.
2x4 Borate treated lumber was down 13.8 percent while 4x4-8 treated post continued to drop by giving back 2.5 percent.
Roof trusses declined 8.9 percent on lower pine pricing.
Most other building material sectors were quiet.
While interest rates will continue to be the main driver for housing despite the pause in increases by the Federal Reserve in June, the threat of further hikes later in the summer could be challenging to homebuyers.
In the state of Florida, concern is growing about the new immigration state law which will go into effect on July 1st. Builders, roofers, drywallers, masons, and framers are reporting that Hispanic crews are already leaving the state in fear of harsh consequences for undocumented workers. The growing concern is that housing demand will improve this summer as the uncertainty of the economy settles, but housing production will plunge as Hispanic labor leaves the state. Labor before the new law was already brutally low in construction and any loss of labor could push out production times and drive-up wage rates as builders fight for less available talent. The real issue is that no one has a stop-gap solution or work around this law.
Builders, my fear is that labor will be a heck of a lot more important in the next 6 months instead of the price and availability of material.
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.