by Don Magruder, CEO of Ro-Mac Lumber & Supply, Inc.
Nothing is better for sagging prices in the commodity market than a hurricane. Since last month, the markets got just what they wanted—another reason to raise prices. The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) jumped 1.9 percent to $34,893.90, ending a two month stretch of declines. Needless to say, Hurricane Florence is the main driver of the market and it is yet to be determined how much structural damage occurred. Based on wind velocity and flooding conditions, chances are Hurricane Florence will be a shingle and sheetrock storm.
The primary price movers in the Index since mid-August were the following:
If the hurricane season continues to heat up, expect pricing to go higher and find a floor in the third quarter. Although this year’s hurricane season has not matched the devastation, it only takes one hurricane to do so.
The housing demand equation continues to be unimpressive. Without support from more hurricanes, the markets may be set for a fourth quarter decline. Builders should remain diligent with a price adjustment clause in their contracts. Most importantly, builders must keep a close eye on items that could be affected by a huge increase in tariffs on Chinese goods. The tariff issue may be the biggest threat to building costs in the next few months, as most people have little idea how many products and manufacturers this will affect. Hang on! It could get a little choppy—not the weather, but 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