December 2015 Whole House Commodity Index
WHOLE HOUSE COMMODITY INDEX – December 2015
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index in December gave back its 0.2 percent increase from November, as the market struggled to find a direction. There is really no impetus to push pricing upwards, and with winter arriving later this year, pricing probably should have been firmer. National weather forecasters are predicting winter to start in earnest the last week of December. That prediction along with the holidays should have a chilling effect on pricing.
New home demand (while better) remains below historical averages. Talk of a recession, plus interest rate increases in 2016 will not help. The country needs a reset in regulations and some type of housing policy for production levels to return to historic norms. The collapse in the energy sector as well as other commodities could have a nasty impact on housing in the oil patch. There are a lot of moving parts, and not many are moving in favor of housing.
Here are some notable price movers in this month’s Index:
- Mortar mix was down 4.4 percent while sand gave back 2.3 percent, thanks to lower fuel pricing.
- Pine dimensional wood was mixed with 2×4 dropping 2.0 percent and wide width 2x12s adding 2.0 percent.
- Spruce dimensional was basically flat with studs retreating 5.9 percent.
- Trusses added 1.0 percent on higher cost for specified grades.
- CDX pine increased 1.4 percent while OSB sheathing gave back 7.5 percent. This is a reversal from the prior month and indicates the market is looking for a direction from demand.
The holidays and winter will be higher pricing’s biggest enemy over the next few weeks. Something tells me the holidays and winter will win.
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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