by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.
In August, the Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) dropped in price for a second month in a row, and the declines this month were accelerated by a multiple of two. The wood commodity markets have been a bloodbath for mills and dealers as uncertainty, demand erosion, and overinflated pricing have finally merged. As they typically do, the mills and manufacturers pushed the markets to a breaking point where builders and consumers found the pricing too high to build affordably. The worry now for many is the housing market may have broken itself in a prequel to a recession.
The Index dropped 4.2 percent to $34,244.16, which is just above February’s levels. If the demand equation continues to erode, expect pricing in all sectors of building supplies to struggle, especially if the hurricane season remains quiet. The June reports on housing were not good as starts, permits, new home sales, and existing sales all trended downward versus the prior year.
The main price movers in the Index in the last 30 days were:
While builders are celebrating the decline in pricing, they should also be concerned. Do these declines indicate that a far worse slowdown in housing is occurring? If cracks in roofing, drywall and door/window pricing occur next month, builders should be concerned.
While last week’s increase in wood sheathing pricing may be encouraging to some, without an improvement in housing demand or a worsening hurricane season, those prices will probably not hold. If the weather holds for the next four-to-five weeks and the uncertainty in tariffs and housing persist, expect pricing to drift sideways and a little lower.
Builders should stay close with suppliers and be careful with long-term pricing. There is a lot of volatility in the markets.
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