July 2020 Whole House Commodity Index

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The RoMac Building Supply Whole House Commodity Index (Index) for mid-July hit a record high of $36,631, which topped the previous high in June 2018. Huge price increases in wood commodities drove the Index to these record levels, and a quick retreat in pricing appears unlikely as uncertainty, thin on-the-ground inventories, and production curtailments due to COVID-19 continue in many areas of the country. The current national spike in COVID-19 cases is making it more challenging for manufacturers to maintain and bolster production as havoc is created with workers who test positive within production facilities. Railcar issues caused by a lack of crews because of COVID-19 is exacerbating the problem with the supply chain.

The following are the notable price movers for the July Index:

  • 5/8 CDX plywood is up 31.6 percent (or $5.60 per sheet) while OSB sheathing increased 21.8 percent (or $2.15 per sheet).
  • 2×4 dimensional spruce is up a whopping 27 percent (almost $2.00 per 16’ piece) while 2×6 spruce added 30.3 percent (or almost $3.00 per 16’ piece).
  • Spruce 2×4 by 92 5/8-inch studs were up 17.8 percent.
  • While 2×4 pine added 5.1 percent and 2×6 pine was flat, 2×12 pine decreased 4.2 percent—the only decrease in pine in the Index.
  • Truss prices were up 2.7 percent on higher pine pricing.
  • 4×4-8 treated posts increased an unimaginable 20.2 percent—to a level which is plus $13 per post. This is a record high price.
  • Rebar dropped 2.9 percent on more availability.
  • There was a small 4.1 percent increase for White Vinyl J-Channel.

While housing demand has improved with some pent-up demand, the reclosing of states is offsetting much of that organic demand. The delays in milling, manufacturing, and shipping due to COVID-19 seem to be fueling higher prices, and these delays will persist as government efforts to test for COVID-19 are failing.

Builders should expect continued volatility. If the reclosing of states continues across the country, expect pricing to start drifting downward. Resolving the COVID-19 issue through science will determine how quickly the housing markets rebound—not the reopening of a state, county, or municipality. Buyers will stay on the sidelines as long as the COVID-19 cases continue to spike. There are not any quick solutions to these problems, especially as the state Florida approaches hurricane season, which is projected to be worse than most years.

Builders should insert a price escalation clause in their contracts. If you need a price escalation clause for your contracts, one has been developed by RoMac Building Supply, which uses this Index as its data points. For more information, email Rebecca.Ballash@RoMacFL.com.

Until next month—stay informed and be safe!

The RoMac Building Supply 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 RoMac Building Supply 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. For great videos and Don’s weekly column, go to www.AroundTheHouse.Tv to subscribe to our YouTube channel and weekly updates.