September 2016 Whole House Commodity Index
WHOLE HOUSE COMMODITY INDEX – September 2016
by Don Magruder, CEO of RoMac Building Supply
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for September 2016 fell as wood commodities offset any gains from other building products. Tropical rains, with no accompanying storms, have slowed the construction pace leaving some to wonder if the market will be drifting lower over the next few months. With the approaching United States presidential election and the chaos associated with it, many are speculating the close of 2016 will be unimpressive.
Over the last 30 days, the Index dropped 1.1 percent to $30,920.24, which wipes out all increases for the summer. With chances dimming of any significant hurricane activity the market will have to be its own catalyst to stop the decline.
Despite the overall decline in the Index, there were areas in which pricing increased due to increases in the cost of labor and operational costs.
The following are the notable movers in the Index:
- Wire mesh added 6.1 percent and rebar 3.7 percent as the price of metal drifted off the bottom.
- Garage doors added 5.0 percent on increased steel pricing.
- Drywall gave back $10 per thousand (or about 4 percent) to meet market conditions.
- Truss prices dropped 4.2 percent on lower lumber costs.
- Pine pricing printed down with 2×4 off 9.8 percent; 2×6 down 5.0 percent; and, wide-width pine falling 8.0 percent.
Keep in mind, base building material costs increased in September; however, a falling commodity market covered up the gains. As these markets adjust back up later, builders could get stung on bids.
The next couple of weeks will dictate what type of fall the housing market will have. My bet is somewhat flat as Americans try to sort out their political future. No doubt about it, each side will tell supporters the world will end if the other is elected and that in itself could suppress the market. Unless there is a surprise hurricane late in the season there will be little to move this market upward.
The Ro-Mac Lumber & Supply, Inc. 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 Ro-Mac Lumber & Supply, Inc. 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 Rebecca Ballash at firstname.lastname@example.org.