September 2013 Whole House Commodity Index
WHOLE HOUSE COMMODITY INDEX – September 2013
by Don Magruder, CEO of RoMac Building Supply
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for mid-September can be best described as uneventful. The Index finished at $29,255.57 or less than one-tenth of one percent. The few increases were offset by declines, which indicate a rudderless market. The supply situation and availability of specific products appear to be the only drivers.
The following are the notable movers since last month:
- Foundation rebar increased 1.4%.
- 2×4 yellow pine increased 1.7% while wider width pine dropped 4.3%-13.6%.
- Spruce dimensional increased 1.5%-8.5% while studs added 3.8%.
- CDX pine dropped 9.6% while OSB sheathing gave back 4.6%.
- Windows increased 5.0% on heavy demand.
- Doors increased single digits due to increased costs.
Many are asking if there is going to be a hurricane season. If the season remains quiet, then housing activity and controlled supply will be the main factors driving the market.
From this vantage point, there are few factors moving the market. Chinese activity could potentially move spruce; however, lackluster housing demand will probably temper price increases. It appears there could be more spotty increases based on particular size or species, which could be very frustrating for builders. Monitoring supply and pricing is a good recommendation to all builders.
The biggest supply issue in the state of Florida continues to be the availability of windows due to reduced capacity. While some manufacturers insist availability is improving, thus far on the ground lead times remain extended and quality diminished. The current availability issue with windows could be a precursor of other building products in the future because the supply chain remains broken with little enthusiasm for major capital investments. Uncertainty in housing along with inconsistent trends continues to hamper a full recovery in the supply chain.
The Ro-Mac Lumber 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.