Over the last 30 days, the Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) increased 0.9 percent to $32,584.27, which reverses two months of declines. For the year, the Index is up 4.0 percent; since July 2016, the Index has increased 4.2%. This may suggest that without a pickup in housing demand, the second half of the year may be more challenging for those who wish to raise prices.
A large part of this month’s increase is being pushed by the new trade duties imposed by the United States government in regards to the U.S.A—Canada Softwood Lumber Agreement. Rumors of an agreement to impose reductions in Canadian lumber imports as well as a flare-up in wildfires has added more uncertainty to the markets. However, pricing still remains below the record level in May. Pricing and the new administration’s stances on lumber are already baked into the pricing, but it needs the heat of a strong housing market, which at many levels remains lukewarm.
The following items had notable wholesale price changes over the last 30 days:
A couple of things could affect pricing quickly this summer. Hurricane season always proves to be a problem, especially if a monster like Hurricane Andrew or Hurricane Katrina were to form. The other thing is tariffs, specifically a huge tariff on steel. Many analysts believe that the Trump administration will make a decision this week on steel tariffs. A rumored 20 percent tariff on steel would have a detrimental impact on housing as well as potentially being the tripwire to a trade war.
The big problem in housing is demand and the biggest drag on demand is affordability. Higher pricing as a result of tariffs and trade policy will only exacerbate a serious problem. Manufacturers, mills, and home builders will be looking closely at the new policies coming out of Washington, D.C.
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