By Don Magruder
The RoMac Building Supply Whole House Commodity Index (Index) for January 2025 decreased by .07 percent to $50,869 from last month, which is down .6 percent from last year. Uncertainty with the new administration taking office on January 20th and winter weather are the primary drivers of the market. As usual, January can be cold and snowy, and this year, early January arctic blasts seem to be having more of an effect on the market. Additionally, most manufacturers, suppliers, and especially exporters are frozen with uncertainty given the threats of tariffs, immigration labor concerns, changes in fiscal policy, and the new Federal Reserve interest rate tone of higher for longer.
Manufacturers are lining up in February and March with price increases, and it appears many could be slow playing these announcements due to future uncertainties. Here are some aspects of the building supply chain that appear to be certain currently. Few see any immediate decreases in interest rates and the bond markets are suggesting even higher rates later. Labor costs show no signs of abating, and any loss of immigrant labor will not support lower labor costs. Insurance costs and other fixed costs are not going down, especially given all the devastation being seen now and over the last few months from hurricanes, tornadoes, and fires. Finally, world oil prices have been rising significantly later due to disruptions in Russian supply and a colder winter, and in the short term, there appears to be little relief.
In short, builders should expect inflation over the next few months, and only slower demand in housing will keep it tempered down. Considering the need for housing and the massive rebuilding in California and the South from natural disasters, it is not clear how all this will work out.
The first key to pricing will be the new administration’s tariff policies, especially toward Canada and Mexico where a lot of building materials filter through to America. If over-aggressive, this could kickstart inflationary pressure in the supply chain.
Here are the primary price movers over the last 30 days.
Concrete increased by 3.2 percent on yearly price adjustments for labor and fuel.
Dimensional pine lumber was mixed with 2x4 pine adding 14.9 percent, 2x6 pine jumping 15.7 percent, and 2x12 pine dropping 4.2 percent.
Dimensional spruce moved lower as mills awaited the tariff news and cold weather bit hard in the northern tier of states. 2x4 spruce dropped less than 1 percent while 2x6 eased down 2.7 percent. 2x4- 92 5/8 studs dropped 3.7 percent on better supply.
Treated 2x4s added 12.0 percent and 4x4 treated jumped 2.5 percent. With all the docks destroyed along Florida’s West Coast during hurricane season, treaters are anticipating a busier spring.
Sheathing prices pushed down on slower demand. CDX pine dropped 3.5 percent while OSB sheathing dropped 8.5 percent.
Truss prices dropped 8.3 percent based on the prior two months of decline, but prices are moving up, so expect this decline to be short-lived.
Pocket frames were up 5.1 on higher spruce and labor cost
Moulding prices dropped 9.5 percent on slower demand and ample supply.
Concrete lap siding increased 8.0 percent on announced increases.
The next couple of months will start providing clarity in the supply chains, and the direction of mortgage rates will determine if the country has a strong home Spring selling season. Builders should keep in touch with suppliers for price increases and lead times. Here’s to a strong 2025 with an abundance of certainty.
The RoMac Building Supply 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 RoMac Building Supply in Central Florida.
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