by Don Magruder, CEO of RoMac Building Supply
The RoMac Building Supply Whole House Commodity Index (Index) is staggering into 2019 like a drunkard who’s just been on a 12-month binge. Let’s be honest, for high pricing in the housing market, the last year has been one big party for mills, manufacturers, and the labor market. However, 2019 could be a different story. Although the party may not be over, the parents may have come home. The first Index for 2019 is down 1.2 percent to $32,911, as the wood commodity market continues to give back previous gains. A bottom may be appearing in the wood markets as dimensional spruce increased in price plus 2 percent over the last month.
Overall, all sectors in the supply and construction industry have concern about the overall durability of the economy and housing market. Housing reports over the last couple of months have been unimpressive; pricing has collapsed; and the chaos in Washington, D.C. seems to be getting worse. No one believes the government shutdown is good for business. The big difference, which suggests this year will be far different than 2018, is the tone in price increases. A year ago, price increase announcements in building materials at all levels were popping quicker than firecrackers at a Chinese New Year celebration.
As 2019 begins, rumors of price declines in many building material items as well as delays in increases are prevalent. Manufacturers and mills are spooked, and it will take a huge increase in housing demand to change the tone.
Listed below are the main price movers in the Index over the last 30 days:
Keep an eye on roofing, drywall, and metal foundation materials for the next month or so, because these product lines could be the best to foretell the future of the markets.
I believe spring will usher in higher pricing like it does historically; however, I do not see the levels like those from 2018. If housing demand does not improve and the chaos in Washington, D.C. subside, expect the economy to sputter, which could lead to more downward pressure on pricing. Builders should not bid spring projects with the current low numbers, and everyone should understand that short-term pricing could spike. My best advice is to keep your suppliers close and don’t try to be the lowest bidder on every project.
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 at