October 2014 Whole House Commodity Index

October 2014 Whole House Graph


by Don Magruder, CEO of RoMac Building Supply

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for October 2014 is just like the housing market—it’s looking for traction.  Manufacturers and mills believe they are in control of pricing one month, and the next month they are begging for orders.  Although the general trend has improved, uncertainty remains a constant factor in housing.

Without a clear and sustained upward movement in housing, we should continue to expect volatility. The Index rose 0.4% to $30,350.60.  This marks the sixth straight data point in which the Index priced out in a very narrow range.  The message is clear—housing is still facing headwinds.

The following were the notable price movers in the Index from September to October:

  • Rebar was down 5.1% as imports outweighed demand.
  • The CDX pine plywood mills remained firmly in charge with a 6.3% price increase.
  • Felt dropped 7.3% on lackluster demand in roofing.
  • Dimensional yellow pine lumber dropped 9.3% to 12.2% as mills ran out of buyers.
  • Spruce dimensional lumber resisted huge slides as mills stayed firm on quotes.  In the last 30 days, spruce studs were almost on par with a half-point drop while dimensional narrow widths dropped 2.5% to 3.1%.
  • Shingle manufacturers implemented a 4.5% increase on shingles; however, it appears there is little sticking power on these increases as demand continues to be spotty.
  • Drywall pricing dropped 3.0% to 4.2% as manufacturers searched for business.
  • Frankly, there’s just not enough sustainable indicators to move the markets in either direction.  With winter closing in quickly, expect pricing to soften.
  • In volatile markets, the end user with hard-timed planned projects is hurt the most.  Without much warning, prices could escalate quickly.  Therefore, builders should be careful using the lowest number to bid projects.  Having a little pad doesn’t hurt, just in case a mill decides to shut down for winter maintenance.

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.