The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for August 2013 increased 0.4% to $29,250.87, predominately on a rebound in dimensional lumber and CDX pine sheathing. After four months of decline in lumber pricing, a bottom and bounce were established, and this bolstered sagging prices in other base building materials. Manufacturers have been very slow to announce price reductions; however, lately, it appears “special truckload savings” and “show specials” are starting to be used to prop-up demand.
The Index has finished within 1.0% of its current value since May, and it demonstrates a sector which is struggling with balancing supply with an inconsistent demand. Since last August, the Index is 4.0% higher--despite the current flat trend.
Here are the notable movers from this month’s Index:
The bump in wood products kept the Index from dropping this month.
Spotty inconsistent demand; uncertainty in Washington, D.C.; and, market fear of the hurricane season seem to be the factors driving the market the most. Like an insomniac tossing in bed, this market is all over the place. This week, an increase in spruce futures fueled by a possible speculative large buy added more anxiety to the market.
The recent 1.0 point increase in mortgage interest rates appears to have an effect on the housing market. At this point, it is hard to imagine demand exceeding the first six months of the year. The hurricane season probably poses the biggest threat to pricing increases over the next 60 days, and it is anybody’s guess. For builders, the word is “cautious”. Contractors should be cautious quoting the current much lower prices for long-term projects.
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 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