January 2016 Whole House Commodity Index

January 2016 Whole House Graph


by Don Magruder, CEO of RoMac Building Supply

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index in January added 0.2 percent from December as products across the board struggled to find increases because of collapsing oil prices, uneven demand, and sagging raw costs.  For the last couple of months, building supply pricing for the Index has hovered in a very narrow range of a couple of tenths.  There is no urgency to buy.

The biggest movers for the month were:

  • CDX pine plywood added 1.4 percent while OSB sheathing gave back 1.3 percent.
  • Roof truss prices added 2.1 percent on higher wood costs.
  • Pine pricing was mixed, with 2×4 up almost 2.0 percent, wide widths remaining flat, and 2×6 down a couple of percent.
  • Moulding pricing was down, on average, 5.0 percent as manufactures searched for buyers.

To say not much was happening in the last 30 days is fairly accurate, but typically there is not much happening during this time of year.

Interestingly, compared to last January, the Index paints a different story.  Pricing over the last year has changed substantially for some product lines. Overall, in the last 12 months, despite a couple of major building code changes that added to the cost, the Index dropped 2.7 percent to $29,551.75.

Here are the more notable price moves in the Index since January 15, 2015:

  • Wire Mesh is down 3.7 percent, with rebar plunging 29.4 percent.
  • Mortar mix is up 11.3 percent, with sand trending down 2.3 percent.
  • CDX pine is down 21.2 percent, with OSB sheathing adding 21.4 percent.
  • Felt is up 41.2 percent, because of Florida Building Code Changes.
  • Most steel connectors are up double digits.
  • 2×4 yellow pine is up 5.6 percent with wide width 2x12s adding 12.6 percent and 2×6 pine giving back 1.4 percent.
  • Spruce studs are down 21.6 percent, with dimensional spruce adding almost 8.0 percent.
  • Engineered wood is up 8.3 percent.
  • Rolled fiberglass insulation is up (on average) 4.5 percent.
  • Architectural shingles, despite all the yearly price gyrations, are basically flat from a year ago.
  • Drywall pricing declined 6.7-9.0 percent, depending on size and thickness, as manufacturers looked for buyers.
  • Because of Florida Building Code Changes that required a shift from aluminum to vinyl windows, window pricing is up 19.2 percent, and patio doors increased a whopping 31.2 percent.
  • Exterior door pricing added almost 6.0 percent while interior door pricing added a couple of percent.  Bifold door pricing is up 9.4 percent, with overall moulding pricing retreating 6.1 percent for casing and 8.6 percent for base.
  • Garage doors increased 3.1 percent on higher steel costs.
  • Cement siding added 5.4 percent over the last year.

The building supplies which have more direct ties to the commodity markets have struggled the most over the last year.

So what does 2016 look like?  It is very concerning how the stock market is starting out the year.  In Florida, so much of the retirement income is directly related to Wall Street and a collapsing stock market could spell real trouble for the housing industry.  If the market stabilizes it should be a good year for Florida.  However, experts are divided on the direction of the market.

Overall, unless manufacturers and mills really curtail production, it appears pricing will struggle to make gains.  The oil patch will slow down dramatically with collapsing oil prices.  This will have a major impact nationally on housing and probably commodity pricing.  Without a significant weather event, pricing will struggle to maintain levels and continued declines will persist in 2016. I expect prices on many items to remain flat to down for most of the year, with seasonal and demand gyrations.

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 rebecca.ballash@romaclumber.com