By Don Magruder
The RoMac Building Supply Whole House Commodity Index (Index) for November 2024 increased 1.8 percent to $51,451, and this amount is 2.6 percent more than the same time last year. This is somewhat in line with the total inflation picture for the country, and it comes after 3 major hurricane strikes in Florida and a Presidential election. The lost time for hurricanes for each of the last three months and the subsequent pressure on labor needed for cleanup has slowed construction production in the state as well as cooled demand as some buyers remain distracted. The state of Florida needs no more hurricanes this year, and unfortunately, there is a potential threat in the last weeks of November.
For the month, OSB and spruce drove up the Index with only a minor decline in 2x4 pine. There are no categories in the building material sector seeing deflation and skilled construction costs continue to escalate. Given Florida’s tight immigration rules, relief is nowhere in sight.
Here are the notable movers for the Index over the last month.
Wire mesh dropped 1.7 percent on competitive pressures.
CDX pine plywood added only .5 percent, but OSB sheathing jumped 19.9 percent on lower supply.
2x4 pine #2 dropped 3.4 percent but 2x6 pine added 10.6 percent and 2x12 pine jumped 6.4 percent. The select pine for truss plants jumped on lower availability.
Roof truss pricing increased 9.6 percent on the higher cost of pine.
The spruce markets increased due to limited supply and higher tariff talks from Canada. 2x4 spruce added 10.1 percent, 2x6 spruce increased 14.0 percent while 2x4 studs jumped 6.2 percent.
Cement siding and house warp dropped less than 3 percent on competitive issues.
Labor costs, transportation costs, and most importantly, fixed equipment and insurance costs will pressure companies to increase pricing after the first year as new contracts are offered. Plus, hurricane damage demand on roofing, drywall, and insulation will probably invite increases in the first quarter of 2025. Builders should prepare for higher costs.
The Federal Reserve is indicating another quarter-point decline in interest rates in the December meeting, and then a pause as fears about inflation going up because of the new tariff policies by the new administration. This wait-and-see signal from the Federal Reserve after the first of the year could soften some demand in the spring buying season. There are many unknowns on which builders should keep an eye on.
Thank you for reading our Whole House Commodity Report, and we hope you and your family have a blessed Thanksgiving holiday.
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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