March 2016 Whole House Commodity Index
WHOLE HOUSE COMMODITY INDEX – March 2016
by Don Magruder, CEO of RoMac Building Supply
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) continues to be stuck in a range that is below the level of August 2015. The March increase of 0.6% to $29,639.90 might be the first sign that pricing is ready to go up or it could be just a seasonal springtime adjustment. One thing is for sure, the momentum in commodity pricing that occurred in most of the spring seasons since the Great Recession did not translate into full-year price increases. Depressed fuel prices and subdued housing demands could result in another springtime pricing repeat.
The following are the notable price movers in the Index since mid-February:
- Foundation rebar was down 4.4%.
- CDX pine was up 3.9% while OSB sheathing added 3.2%.
- Narrow width pine was flat with wider width 2x12s adding 7.0%.
- 2×6 spruce added 3.9% while 2×4 dimensional spruce increased 7.5%.
- Spruce studs added 7.3% from their declines in January and February.
- Show specials dropped insulation pricing 3.7%, with house wraps giving back 2.2%.
- Interior door units were up less than 2.0%.
- Manufacturers in drywall and steel studs have announced increases of 10.0% plus for April. It remains to be seen if the market has enough strength to support those increases. With lower fuel costs and depressed markets for many commodities, these increases could be harder to justify and hold onto—time will tell.
As with most spring seasons, prices generally move up. Thus far, the increases have been somewhat tempered—there is no heavy run-up as in busier years. April and May will be good indicators if these markets have legs to run. Builders should update quotes and probably pad material for projects later in the year. This is a good time to keep close to your building supply professional and dust off your price escalation clause in your contracts.
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