The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for September 2014 remained par with August, as price gains were offset by price decreases in other areas. America’s housing market is in purgatory between boom and bust with builders uncertain if next year will be heaven or hell.
Most analysts believe the gain in housing starts, in July, was a result of the normal adjustment from unexpected lower starts, earlier in the year, and they do not expect an upward trend. The problem continues to be, ordinary people are finding it very difficult to qualify for a home loan. In addition, the cash and investment buyers, who propelled the markets over the last couple of years, may be running out of steam.
The Index increased a dismal $8 to $30,219, netting out a zero percent difference from August to September. The following were the price movers within the Index:
The declines in plywood were precipitated by the market settling down after a plywood mill fire in Springfield, Oregon back in August. It took a few weeks for the mill to determine that production could keep up with demand. Mills are looking for anything that can create an upward move in pricing.
The Index dropped 3.2% since last September, and the impetus going forward does not appear to be upward. Last fall, the Index remained flat despite a strong year-end. This year, without an unexpected pop in business, builders should expect pricing to remain flat or moderate. The next few months will be a good time to build.
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