March 2014 Whole House Commodity Index
WHOLE HOUSE COMMODITY INDEX – March 2014
by Don Magruder, CEO of RoMac Building Supply
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) increased 1.7% to $29,994.89, primarily on the increase in masonry supplies and sheathings. Prices are up 1.7% since January, and up 2.5% since last year. Interestingly, the March 2014 Index is one-tenth of one percent lower than April 2013, which was the second highest number in the history of the Index. If warmer spring weather boosts sales or there is significant inflation due to fuel costs, expect the Index to hit record highs.
Here are the Index’s notable movers for March:
- Wire foundation mesh was down 5.3% on imports’ overwhelming supply.
- 3000# concrete increased 8.6% while block added 6.6% to 9.4% as manufacturers struggled to cover costs.
- Sheathing costs were up significantly. CDX pine soared 19.5% and OSB sheathing jumped 7.2%. It seems manufacturers have managed supply to current demand.
- Wide width pine lumber was up 9.0% while narrow widths were mixed in the lower single digits.
- Spruce dimensional was basically flat trading in the positive single digit range.
- Vinyl siding soffit added 3.3% while PVC cellular boards gave back 4.1% on increased competition.
- Moulding prices were mixed as some wholesalers offered deals.
Shingle manufactures have announced increases in April from 3%-5%, which might stick if fuel prices continue to rise and the wicked weather continues. The next 30-45 days will probably dictate the trends for the year.
The weather is improving and this will be the point in which housing will either take off or meander in the doldrums. For the first couple of months of 2014, weather has been blamed for the lackluster numbers; this may be the point in which experts have to quit blaming the weather and start blaming the economy and the new regulatory environment.
If construction steps up over the next month, or so, expect prices to jump dramatically; however, my cracked crystal ball is predicting a very narrow range of price deviations in the short-term. Still, builders should protect themselves with an escalation clause in their contract, because historically bad winters usually result in heavy price runs in the spring.
Watch fuel prices because they are rising. In Central Florida, there have been some spotty gas shortages. This could raise prices in building material items that rely heavily on fuel for production or logistics.
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