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News items, advice, tips, resources for the Luxury Homeowner and their Lifestyle

What to Consider in Today's Housing Market

Highly customized (read: weird) homes are a harder sell

The surge in construction materials prices resumed in March with the price index up 1.3% from February. Another short term rise in energy prices was a major contributor with diesel prices 8.9% higher, reversing the drop in February. Diesel highway pump prices are up another $0.15 since the March survey week. Apart from energy, prices for metals and lumber rose significantly in March with higher prices for these commodities beginning to creep in to the prices of wood and metal manufactured items.

The price indexes for assembled equipment (construction equipment and tools as well as building systems) continue to trend flat to slightly down. This reflects overall inflation in the economy which remains barely above zero. The March 0.7% increase in the Producer Price Index reflects the impact of recent short term increases in both food and energy prices. Excluding food and energy, the price index rose only 0.1%.

The price surge has not yet reached concrete products and is unlikely to until late in 2010 at the earliest. Periodic price surges for cement are primarily driven by the need to import cement when US production capacity is exhausted. However, there was a 0.5% rise in usually stable brick prices to 0.1% above the previous March. This may be due to rising residential demand that brickyards were slow to adjust to. Brick raw material costs are steady and the cost of natural gas for the kilns is declining.

Paint (-3.4%) and aluminum (-2.7%) were the only two significant price declines in March. The March metal price increases included steel scrap (12.3%), nonferrous scrap 9.6%, nonferrous pipe (8.2%) and steel pipe (2.9%). The March lumber price increases included softwood plywood (4.5%), engineered wood products (3.5%) and softwood lumber (2.4%). The March rises exaggerate lumber price trends for the rest of 2010. Spot prices have risen well above both contract prices and futures prices as mills are slow to a small rise in buyer demand.

The overall construction materials price index is 4.7% above a year ago but prices have increased at twice that pace in the last three months. The outlook is for the price index to finish 2010 at about 7% above the end of 2009 level. By contrast, overall prices in the economy will only be 1-2% higher by yearend.  April 23, 2010 - Jim Haughey 


Christopher Peacock Cabinetry

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Carved Stone Creations

Signature Designs DVD Series: Do-it-yourself Decorative Finishes

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European Vacation Rentals

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