Housing supply indicators in mid-April 2015 still do not point to a vastly improving housing market; if anything, they are indicating the opposite. Since March, the Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index dropped 0.4 percent. The decline would have been further if not for some healthy quarterly adjustments in freight costs. Weather reports can no longer be used in explaining underperforming markets, and I simply do not buy the notion that a shortage of inventory is creating lackluster numbers. What I have seen after having been in this business for 35 years—if demand were that strong, everyone in the supply chain would be feeling the pressure, as builders quickly slapped up houses on vacant lots.
In my view, the same problem continues to hamper the recovery in the housing industry. Ordinary people cannot get access to capital, and those who may qualify do not have the patience or will to navigate the 800 pages of government red tape and roadblocks. Government regulations have made it too difficult for many buyers to get through the home buying process.
Here are the notes from last month’s market movers:
Concern by builders, manufacturers, and suppliers about the real health of the housing industry is mounting. Those home builders and suppliers in the oil patch are starting to grow uneasy, as low oil prices are shutting down production and jobs. Today, I received a forecast from experts in the drywall industry. They expect to see their products deflate in price throughout the year. It also appears that shingle manufacturers are really struggling to hold onto their pricing.
While many see declines in pricing as a good thing, in most cases it is the best indicator of the real demand in housing. With spring well underway, the selling season is not looking as good as promised. Hopefully, this spring will be a late bloomer.
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