May 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - May 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for May 2018 regained its upward momentum by increasing 1.3 percent to $35,580.86—a record high. The price flattening that occurred in the April Index appears to have been only a moment of consolidation as the price inflators of the market seem to be in charge. Tariffs on steel, aluminum, and Canadian lumber; shortages in labor and trucking; and market uncertainty and turmoil are creating an inflation-rich environment. How much more in cost increases can this housing market endure before it goes into revolt?

The primary price movers in this month’s Index were:

  • Foundation wire mesh jumped 15.6 percent while rebar added 7.7 percent.
  • CDX pine plywood retreated 3.1 percent while OSB sheathing added 6.2 percent. It is uncommon to see these two sheathing products move in opposite directions. This could be a sign of an unsure market.
  • 2x6-16 pine added 24.3 percent, 2x12 pine added 13.5 percent, and 2x4 pine added 8.2 percent.
  • Spruce studs were up 5.8 percent, 2x4 dimensional added 7.1 percent, and 2x6 spruce barely increased 0.3 percent.
  • 4x4 treated posts added 3.4 percent while 2x4 treated jumped 5.5 percent.
  • Architectural shingles increased 7.2 percent (as well as roofing shingle accessories).
  • Tile backer and drip edge both added 2.0 percent plus.

Many of this month’s increases are being sent with another caveat—longer lead times and delays. Improving weather in the northern states as well as a shortage of truckers brought on by agricultural season are creating shipping nightmares. Higher trucking costs are being tacked onto higher material costs with longer lead times.

Inventory and supply in the chain are facing a silent foe that many hesitate to discuss—cash flow. Higher commodity costs and longer lead times are busting the cash flow of many companies in the supply business. Plus, builders who can ill-afford to pay more for products on projects that have already been bid are taking longer to pay for materials. This burning through cash as well as money lost on projects due to inflation could start the undoing for many.

Over the next couple of months, inflation in pricing and supply will be in charge—expect to pay more and wait longer. Afterwards, I am not sure the housing demand will begin to tap out to higher costs. The affordability equation is getting very close to the demand quotient and I am not convinced these prices can be sustained. A bad hurricane season will give it fuel, so things are very murky.

Builders should have a price escalation clause in their contracts and be mindful that a long-term relationship with suppliers is very important. Correctly bidding and not being suckered into low prices will be the difference in making money—be careful.

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 www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

April 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - April 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for April 2018 was virtually flat since March.  However, there was plenty of movement within the Index indicating that the inflation run in commodities in building supplies is not over.  The Index in mid-April settled at $35,134, which is only 0.3 percent more than March.  This small increase marks the first time that pricing in the building material sector slowed down this year.  Although the flattening in pricing is blamed on a lingering winter in the Northeast and Midwest, the housing demand equation could be softening as pricing becomes unbearable for many prospective homebuyers. 

A dive into the actual costs that make up the Index demonstrates the turmoil.  Here are the main movers in the Index over the last 30 days: 

  • 20x100 rolled foundation poly retreated 11.6 percent on spring buys. 
  • 5/8 grade 40 rebar added 16.1 percent on Trump steel tariff concerns.  Wire mesh dropped 1.8 percent on price resistance by the market. 
  • 5/8” CDX pine plywood dropped 5.4 percent on weaker demand while OSB sheathing manufacturers were able to bolster pricing up 6.0 percent on managed supply.
  • Simpson hurricane ties were up 25.0 percent on Trump steel tariff concerns. 
  • 2x4 spruce was flat to down 0.5 percent while 2x6 spruce dimensional lumber dropped 4.1 percent on softening demand.
  • 2x4-92 5/8 #2 spruce studs were flat trying to find a direction in the market.
  • 2x4 dimensional pine dropped 8.5 percent, 2x6 pine was flat, and 2x12 pine retreated 6.4 percent.  
  • The decline in pine pricing offset the 15.0 percent increase in metal plates as truss pricing retreated a miniscule 0.3 percent. 
  • Treated 4x4-8 posts increased 10.1 percent as the treaters entered the spring market. 
  • Insulation board increased 6.7 percent as did rolled insulation, which added 3.7 percent.
  • Metal ridge vents were up 25.0 percent and aluminum drip edge was up 5.1 percent on Trump tariff concerns. 
  • Garage Doors were up 4.2 percent on increased steel costs related to tariffs.  Garage door operators added 5.1 percent because of increased manufacturing costs. 

What is spooky about this Index for the month is that core inflation, which typically does not fluctuate, as wood commodities increased within the Index.  Increases in steel foundation rebar, garage doors, insulation, and roofing metal were offset by declines in wood commodities that could be affected by weather.  It would not be out of the question to see a rebound in wood commodities over the short-term as spring and summer take hold.  This could expose a real pop in pricing.  

Builders should be aware that a real base amount of inflation was built into the housing costs over the last 30 days, which will be exposed as wood commodities rebound.  This makes future pricing difficult.  Unless the market demand declines dramatically expect the Index to remain firm and retain most of the increases it has garnered since the first of the year.  

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 www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

March 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - March 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for March 2018 increased 3 percent to $35,046.02, as tariffs and trade issues involving Chinese steel and Canadian lumber continue to angst the commodity markets.  The surprise announcement caught many off guard, as they believed the threat of steel tariffs was being overblown. The 25 percent steel and 10 percent aluminum tariffs change the pricing dynamics of the residential housing market, because most products in the housing sector rely on imported steel and aluminum.  

The Index for March is at a record high and there appears to be little signs of abating. Considering the following facts, the building supply sector is overheating, and the inflation demon is truly at play.

  • The Index is up 7.4 percent since December 2017.
  • Since December, rebar is up 44.2 percent; wire mesh is up 9 percent; 2x4-16 yellow pine is up 32.1 percent; 2x4- 92 5/8 spruce studs are up 14.5 percent; 5/8 CDX is up 17.1 percent; trusses are up 13 percent; 2x4-16 spruce is up 18.4 percent; and 1/2”4x12 drywall is up 14.6 percent.

Although we are in the dead of winter, the inflation since the first of the year has rivaled any hurricane period. 

In regards to this month’s report, the Index continued to increase over the last 30 days, and here are the notable movers since mid-February:

  1. Wire mesh is up 2.4 percent and rebar is up 7.4 percent.
  2. 2x4-16 pine is up 6.5 percent while 2x6 pine added 2.4 percent and 2x12 pine declined 2.4 percent.
  3. 2x4 spruce studs added 6.9 percent while 2x4 spruce increased less than 2 percent and 2x6 spruce was down slightly.
  4. CDX plywood added 10.6 percent while OSB sheathing jumped 9.8 percent.  
  5. Roof trusses edged up 5.2 percent on higher wood costs.
  6. New price increases by most roofing manufacturers during the first week in March added almost 5 percent to shingle pricing.
  7. Spring has brought inflation to 4x4 treated posts, which added 15.1 percent.
  8. Aluminum drip edge and vents were up almost 6 percent on higher demand and cost—this was before the tariff announcement.  Since the tariff announcement, proposed increases have been announced upwards to 25 percent.
  9. Windows were up 4.5 percent on increased cost in manufacturing.

Substantial inflation has been seen in the building supply sector over the last 30 days, and there appears little momentum for lower prices anytime soon.

The steel and aluminum tariffs are not completely reflected in these costs, which is disconcerting.  Even worse, real supply concerns are heightening every day. The sudden, unexpected announcement of tariffs by the President froze the import markets immediately and orders were cancelled by exporters.  Because uncertainty remains as to which countries will be affected and the unknown retaliatory responses of countries being tariffed, the supply chain is broken. This may result in shortages of product later in the spring and summer. 

Availability angst is growing with building supplies that depend on steel and aluminum.  Certain foundation metal products have already become almost impossible to find and concerns about nails and fasteners are growing.  Demand for metal roofing accessories has already stressed those supply chains and manufacturers are announcing immediate 25 percent increases with warnings of supply disruptions.

The price increases are coming and nothing barring a total collapse of the housing market is going to stop them.  Builders should work with their vendor partners to plan needs and ensure adequate supplies are available when they need them.  Allocations may come in certain sectors, and supply availability to customers may be dependent on prior buying histories.

Currently, the markets are in a highly inflationary period and the markets are extremely volatile.  Now is the time to include a price adjustment clause in your contract. If you would like one based on this Index, please email Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. for a copy.

Builders today should update bids and be mindful of future project pricing.  Just as important, communicate future needs with your suppliers. Now is the time when true business partnerships will pay the most dividends.

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 www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

February 2018 Whole House Commodity Index

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WHOLE HOUSE COMMODITY INDEX - February 2018

by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for February 2018 increased a whopping 2.8 percent to $34,030.08 as the January spark in the commodity market raged into a full-fledged flame in February.  This type of increase in the dead of winter is unusual—is this a prediction of what’s to come this spring or will this price run flame out when the weather turns warmer?  Little doubt, it depends on housing starts and that is the question.  The steep decline in housing starts in December coupled with only a 2.4 percent increase in homebuilding starts in 2017 is leading some to pause and see if this price runup can be sustained.

One big element in the recent price increases is trucking.  Prices are going up and availability is being stretched with new record keeping.  This will only grow worse during the spring as agriculture competes for available trucks.

The big price movers in the Index from mid-January to mid-February were:

  • Foundation rebar was up 12.1 percent on the United States trade policies and tariffs.
  • 2x4 yellow pine added 12.1 percent while 2x6 was up 7.9 percent and 2x12 pine added 19.4 percent.
  • The heavy increases in pine pricing forced truss prices up 5.0 percent.
  • Spruce pricing was also up—2x4 studs added 3.6 percent, 2x4 spruce increased 6.1 percent, and 2x6 spruce posted the smallest gain at 1.5 percent.
  • CDX pine plywood increased a strong 7.8 percent while OSB sheathing added a whopping 16.8 percent.  Mills are doing a much better job managing inventories to demand.
  • Exterior doors were up 3.0 percent on higher costs from manufacturers.
  • Engineered wood was up 18.0 percent on increased production cost.

With all the chaos in Washington, D.C., the threat of tariffs, interest rate concerns and changes in the tax law (which hurts secondary housing), the housing market could weaken.  In my view, there is just a likelihood pricing in April could be lower than February.  The next two months of housing numbers will be the best indicator of pricing for the year.

To be safe, builders should beware of pricing projects for March and April with January’s pricing as warm weather and new tax cuts could make the markets volatile.  Now is the time to include a price adjustment clause in your contract.  If you would like one based on this Index, please email Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. for a copy.

Good luck and Happy Valentines Day!

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 www.romaclumber.com to sign-up for the Index and other free market reports.  To sign-up for this information via email, contact Rebecca Ballash at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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