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The Ro-Mac Lumber Whole House Commodity Index for December dropped .4% as an early start to winter cooled sales down across the country. As one veteran observer pointed out, it appears the northern United States will have a real winter this year. Only four items on the index increased compared to nine items which decreased. The vast majority of the items remained flat in pricing. Nothing real impressive either way.
Here are the few notable price changes.
As you can see there is not much happening.
Now it is time for the big question.
As we have warned for the last several months, countless companies and segments of the markets have announced significant increases after January 1st. If most of the United States is in the midst of a real winter and demand is slow to build, which companies and segments of the market are willing to push announced price increases?
Plus, new mortgage rules via Washington D.C. could damper housing demand next year. This is above the typical government dysfunction of budget battles, health insurance, and over regulations which have been impeding new housing growth this year.
Probably the most interesting comments I’ve heard lately is how business improvement is more confined just to the larger areas. Many vendors have pointed out that in rural areas of the South, the economy is still very bad and those areas continue to suffer badly economically. There is a softness permeating the market and while the winter weather may be blamed, it is still debatable.
Keep one thing in mind about the permit numbers in Florida and other areas. Many local governments are re-instituting impact fees or increasing building permit fees in January, plus the new mortgage rules also start in January. Year-end permits numbers could be distorted leading to a false optimism, this tempers my optimism a little for 2014.
Over the next 30 days manufacturers and mills will try to firm and increase pricing, but I am not sure the market or weather will cooperate. Keep a close eye on the market and bid projects with increases in mind, but with the hope of a pleasant surprise when the purchase orders are actually cut.
Finally, Have a Merry Christmas and joyous, prosperous New Year. May God Bless you, your family, and business.
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