By Don Magruder
For June 2016, the Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) increased 0.7 percent to $31,209.58, which represents a four-month streak of increases.
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for May increased 2.8% to a new high of $31,002.18, primarily on the strength of the lumber and sheathing market.
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for April had the biggest one month increase in two years, but the Index still finished under last year’s level. Building materials and commodity markets are trying to develop some upward momentum, but overall market strength is just not there—it’s spotty.
Over the last 30 days, the Index increased 1.7% to $30,145, which is about a half point lower than April 2015. The vast majority of the items were flat, with those increasing pricing doing so with moderate enthusiasm.
Below are the primary movers in this month’s Index:
The challenge for pricing and this month’s increase is whether or not it has legs. Some believe (and history in recent years has indicated) that April price increases have failed to go into May and June. This year, especially with a milder winter, there is a belief that the northern areas will have a lackluster spring building season. This could prove detrimental to propping up pricing. The continued economic struggles in the oil patch economies could damper home sales as summer heats up.
One area that may see some price appreciation is roofing. Bad weather and hailstorms are creating roofing demand in Texas as well as many areas throughout the south. This year, spring and summer price increases in roofing could actually stick and manufacturers may be starting to be in charge again—we will see.
Overall, builders should be mindful of the increases, include them in their bids, and watch for specific increases in certain products. Let’s see if April’s price increases really have legs and if they can run past mid-May—I would not bet on it.
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
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) continues to be stuck in a range that is below the level of August 2015. The March increase of 0.6% to $29,639.90 might be the first sign that pricing is ready to go up or it could be just a seasonal springtime adjustment. One thing is for sure, the momentum in commodity pricing that occurred in most of the spring seasons since the Great Recession did not translate into full-year price increases. Depressed fuel prices and subdued housing demands could result in another springtime pricing repeat.
The following are the notable price movers in the Index since mid-February:
As with most spring seasons, prices generally move up. Thus far, the increases have been somewhat tempered—there is no heavy run-up as in busier years. April and May will be good indicators if these markets have legs to run. Builders should update quotes and probably pad material for projects later in the year. This is a good time to keep close to your building supply professional and dust off your price escalation clause in your contracts.
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