December 2016 Whole House Commodity Index

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Whole House Commodity Index 
December 2016  -  By Don Magruder

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for December 2016 jumped 1.1 percent to $31,236 as unexpected strength in wood commodities lifted the total Index.  The stock market has been on a tear since the election and many in the supply industry believe that the proposed infrastructure spending could be a boom for commodities.  It remains to be seen if this will occur or if higher interest rates quell any such rally.  As of now, suppliers and manufacturers are feeling optimistic.

For mid-December, the notable movers in the Whole House Commodity Index were the following:

  • Steel construction connectors were up 3-5 percent on higher raw costs.
  • Trusses were up 3.8 percent on higher labor, workers’ compensation, and wood costs.
  • CDX pine plywood was up 3.5 percent, with OSB sheathing mirroring the increase with 3.6 percent.
  • Wide width 2x12 pine was up 10.8 percent, with narrow 2x4 pine adding 7.9 percent, and 2x6 moving forward 1.1 percent.  Specific tallies were demanding more money.
  • Spruce dimension pricing was mixed, with 2x6 spruce increasing 6.4 percent while 2x4 spruce gave back 5.7 percent.
  • 2x4 spruce studs added 5.3 percent.
  • Gypsum conceded on average 2.0 percent to market adjustments.
  • Vinyl siding and accessories added 4.0 percent.
  • Engineered beams dropped 7.1 percent on increased competition.

There was a lot of pricing activity in December and this may indicate that manufacturers and mills are preparing for an inflationary period in 2017.

The Canada—United States Softwood Lumber Agreement is somewhat in shambles and there is a real possibility that countervailing duties could be put on spruce lumber entering the United States from Canada by late spring.  Given the shift in the country’s policy under the new administration is seems highly likely this will happen.  The rub for builders is this duty could potentially raise lumber prices and shift the demand equation.  Tariffs and trade wars could be very bad for pricing next year and interest rates really could be the wild card.

Hang on—it could get bumpy in 2017.

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

November 2016 Whole House Commodity Index

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Whole House Commodity Index 
November 2016

By Don Magruder

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for November 2016 declined 0.7 percent to $30,889.33, as the markets tried to digest the future of housing in light of the surprising presidential election results.  A stubbornly inconsistent housing market coupled with a fizzle in hurricane season has given few manufacturers and mills an opportunity to lift prices.  It appears the markets may be starting the first stage of their winter hibernation.

Only two items in the Index increased in price—rebar was up 1.8 percent while 4x4-8 treated posts added 5.8 percent.  All other items dropped in cost at the wholesale level.  All spruce lumber was down 2.5-3.0 percent while pine lumber gave back more, with decreases ranging from 5.6-7.1 percent.  CDX pine plywood retreated 6.6 percent, with OSB sheathing handing back 3.5 percent.  The remaining items in the Index remained flat.

If anyone tells you what is going to happen next year in housing, don’t believe them—just ask President Hillary Clinton.  Here are a few things to watch as President-elect Donald Trump starts implementing his programs.

  1. A huge increase in infrastructure spending will require the government to borrow more.  The days of 3.5 percent interest rates are probably gone.  Plus it could be very inflationary for materials.
  2. If he implements his trade policies, expect tariffs to fly in all directions.  Pricing for wood and steel could become very volatile.
  3. If he builds a wall and deports millions of Hispanics, the bad labor situation could become much worse.  

There is little doubt about it, uncertainty is at play in the markets.  Things could get really good or really bad, depending on how all of these things shake out.  People in the construction industry should weigh their risk and exposure until a clear direction has been charted by the next administration. 

Have a wonderful Thanksgiving holiday and be sure to count your blessings one by one. 

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

October 2016 Whole House Commodity Index

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Whole House Commodity Index 
October 2016

By Don Magruder

Home builders dodged a large bullet on October 6, 2016, when Hurricane Matthew wobbled east about 30 miles, just off Florida’s coast, and averted what could have a been a natural disaster of epic proportions. A wobble or veer west by Matthew would have resulted in billions of dollars in damage, massive strains on the supply chain, and even worse a labor shortage like none other. New home construction in Florida could have easily been shut down as most skilled labor would have relocated to the disaster zone. Although the flooding and wind damage in certain areas on the Florida and Carolina coastlines was severe, it is far from widespread.

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for October 2016 has a hangover from Matthew as sheathing prices jumped. However, the winter season and U.S. presidential election should drag those prices down in short order. For October, the Index increased 0.6 percent primarily on the price increase in sheathings. Since the first of the year, the Index is up 5.2 percent, which is strong given the up-and-down nature of the housing market in the last few months.

The notable price movers for October were:

  • CDX Pine was up 6.6 percent while OSB added 4.8 percent.
  • Rebar was down 7.1 percent as wire mesh retreated 6.5 percent.
  • 2x4 yellow pine added 14.2 percent while 2x6 pine added 4.2 percent and wide width 2x12 gave back 6.3 percent.
  • Spruce studs added 2.2 percent and 2x4 spruce dimensional jumped 3.7 percent. 2x6 spruce was flat to down 0.4 percent.
  • Drip edge added almost 3.0 percent on continued increased in steel costs.

The market could retreat as hurricane season becomes less threatening.

Market signs and the time of year are not pointing to higher commodity prices. A wait and see attitude on many things in business is going on as Americans prepare to vote. One thing is for sure, a wobble east made this report much easier to write. Everyone is truly blessed.

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

September 2016 Whole House Commodity Index

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Whole House Commodity Index 
September 2016

By Don Magruder

The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for September 2016 fell as wood commodities offset any gains from other building products.  Tropical rains, with no accompanying storms, have slowed the construction pace leaving some to wonder if the market will be drifting lower over the next few months.  With the approaching United States presidential election and the chaos associated with it, many are speculating the close of 2016 will be unimpressive.

Over the last 30 days, the Index dropped 1.1 percent to $30,920.24, which wipes out all increases for the summer.  With chances dimming of any significant hurricane activity the market will have to be its own catalyst to stop the decline. 

Despite the overall decline in the Index, there were areas in which pricing increased due to increases in the cost of labor and operational costs.

The following are the notable movers in the Index:

  • Wire mesh added 6.1 percent and rebar 3.7 percent as the price of metal drifted off the bottom.
  • Garage doors added 5.0 percent on increased steel pricing.
  • Drywall gave back $10 per thousand (or about 4 percent) to meet market conditions.
  • Truss prices dropped 4.2 percent on lower lumber costs.
  • Pine pricing printed down with 2x4 off 9.8 percent; 2x6 down 5.0 percent; and, wide-width pine falling 8.0 percent.
  • Spruce dropped as studs declined 2.1 percent; 2x4 dimensional decreased 3.9 percent; and, wider 2x6 spruce eased down 5.3 percent.

Keep in mind, base building material costs increased in September; however, a falling commodity market covered up the gains.  As these markets adjust back up later, builders could get stung on bids.

The next couple of weeks will dictate what type of fall the housing market will have.  My bet is somewhat flat as Americans try to sort out their political future.  No doubt about it, each side will tell supporters the world will end if the other is elected and that in itself could suppress the market.  Unless there is a surprise hurricane late in the season there will be little to move this market upward.

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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