by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for June 2018 set another record high at $36,436.94 as material costs increased at an even faster pace. The Index added 2.4 percent since mid-May—almost doubling the rate of increase in the prior month. Until this week, pricing has been moving upward almost unabated; however, some cracks in prices has developed over the last 7 to 10 days. Market professionals are trying to determine if this is a breather or the first small signs of a retreat.
From January 15 to June 15, 2018, the Index increased $3,327.85 or 10.1 percent. It is important to note this does not include the new United States tariff policy or price increases in mechanical, electrical or plumbing, which have been greatly impacted by labor increases.
The Index represents the structural material to build a 2,200-square foot home, and the notable price movers in the Index over the last 30 days were:
Who can eat a 10.1 percent increase in a five-month period? Builders who are already strapped with labor issues and dwindling margins? A consumer who has incurred record debt? Or, suppliers that are still reeling from the Great Recession? The answer is simple—no one can. Housing demand will become victim if prices do not settle down and begin to drop. The line between affordability and demand might have already been crossed. If so, expect these markets to retreat. If not, they could have a few more months of legs.
A weak hurricane season would be the best thing for pushing these markets downward. Keep a close eye on the commodity markets, things could get real bumpy the next few months. If demand eases, the pricing floor could collapse very quickly.
A Price Adjustment Clause is a smart thing to have in your contracts. Ro-Mac Lumber & Supply, Inc. has drafted a clause that is tied to this Index. If you would like to obtain a free copy of Ro-Mac’s Price Adjustment Clause, email Rebecca Ballash at
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