July 2015 Whole House Commodity Index
WHOLE HOUSE COMMODITY INDEX – July 2015
by Don Magruder, CEO of RoMac Building Supply
Since last month, the Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) increased 0.6 percent to $30,136.85, but in actuality if not for the new Florida Building Code the Index would have dropped 0.8 percent. Wow! That sounds like double-talk from a twice-convicted politician.
The Florida Building Code updated on July 1, 2015, and insulated aluminum windows in the Index had to be upgraded to vinyl windows to meet the new energy standard. The windows went up 19.2 percent and the new vinyl patio door is 31.2 percent more. Builders, make note that any of your projects that have not been permitted before July 1, 2015, will face the new window standard.
For the most part, pricing remained stable-to-down with a mixed bag on certain commodities. There continues to be very little impetus for a rising market, and it is almost like most items are in a holding pattern. Commodities worldwide are struggling to find a foothold and hold pricing, so I see little change in the near-term without a significant event either weather or demand driven.
The following are the notable movers in this month’s Index:
- CDX pine is down 6.7 percent while OSB sheathing also drifted lower by 4.0 percent.
- Narrow width pine is down 1.3 percent with wide width 2×12 up 6.7 percent.
- Trusses dropped 2.8 percent on lower pine numbers.
- Spruce studs were slightly up with dimensional spruce adding 2.3-3.4 percent depending on width.
- As mentioned earlier, the increase in window pricing (due to changes in the Florida Building Code) are 19.2 percent on windows and 31.2 percent on patio doors.
I have two concerns this month. First, I am not sure there is enough available vinyl window production in the short-term to keep up with demand. I fully expect much longer lead times, higher prices, and service nightmares. Builders should order windows early and, most importantly, thoroughly verify their orders, because there will probably be very few quick ships for orders that are placed wrong.
My second concern is the direction of commodities in general. The worldwide economy is not good, and this turndown in commodities ultimately could draw down supply. Builders should understand that a rising commodity price is your best indicator of a thriving housing market. My suggestion is simple—this time of year stay on top of your supply chain. A Hurricane Andrew event anywhere in the United States could change market pricing quickly, as the supply chain is very thin right now. This is also not a good time to order products at the last minute. Good planning could be a big advantage to builders in the next 30-60 days.
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 email@example.com.