Construction materials prices largely steady in June

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The Bureau of Labor Statistics (BLS) released its producer price index report for June 2019. It showed that overall prices for processed goods for intermediate demand fell by 1.1 percent in the month. The index was 2.1 percent lower than its year-ago level. However, the decline was largely attributable to a 4.9 percent in the price index for energy goods. Excluding food and energy, the price index for processed goods for intermediate demand was down only 0.1 percent.

The changes in these indices compare with a 1.6 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in June.

The BLS index of construction materials prices was down 0.3 percent from May 2019, before seasonal adjustment. It was 1.0 percent higher than its year-earlier level.

Multihousing Pro (PRO) compiled the BLS reported price changes for our standard list of construction materials. These are commodities whose prices directly impact the cost of constructing an apartment building. The two right hand columns of the table provide the percent change in the price of the commodity from a year earlier (12 Mo PC Change) and the percent change in price from May 2019 (1 Mo PC Change). If no price data is available for a given commodity, the change is listed as N/A.

Commodity

12 Mo PC Change

1 Mo PC Change

Softwood lumber

-18.2

-2.5

Hardwood lumber

-8.2

-1.0

General millworks

2.3

0.0

Soft plywood products

-22.8

-3.1

Waferboard and oriented strand-board (OSB)

N/A

N/A

Hot rolled steel bars, plates and structural shapes

0.7

-1.7

Copper wire and cable

-3.6

0.3

Power wire and cable

2.2

-1.1

Builder’s hardware

3.4

0.0

Plumbing fixtures and fittings

6.4

0.0

Enameled iron and metal sanitary ware

1.2

0.0

Furnaces and heaters

11.8

4.0

Sheet metal AC ducts and stove pipe

N/A

N/A

Electrical Lighting fixtures

6.0

0.0

Nails

-0.4

0.0

Major appliances

4.3

-0.2

Flat glass

0.8

-1.0

Ready mix concrete

3.1

0.9

Asphalt roofing and siding

4.3

-0.9

Gypsum products

-8.1

-2.6

Mineral wool insulation

-1.9

-0.2

 

The big story of 2018, the surge in the prices of lumber products, has become a non-story in 2019. Lumber prices are down significantly from their recent highs and have been relatively stable this year. Price changes for softwood products are show in the first chart.

Again this month, the BLS has not reported on the price of OSB. They have actually removed this category of product from their most recent report. In the future, we many have to rely exclusively on the Random Lengths structural panel composite price index, in order to track this commodity type. That index is up 1.2 percent on the month but down 34 percent compared to its year-earlier level.

Pricing trends of several construction materials whose prices surged last year are illustrated in the next chart, below. It shows that they have largely stabilized since last fall. The price of one of them, gypsum products, is actually below its level of two years ago.

As was the case last month, the construction materials prices which have risen the most recently are more finished goods. Prices of furnaces and heaters have risen the most over the last 12 months, with a gain of 11.8 percent. Their prices have also risen the most recently, with a gain of 4 percent in the last month. Prices of plumbing fixtures and fittings and electrical lighting fixtures have also gone up in excess of 6 percent over the last year, although they are unchanged for the month of June.

The full BLS report can be found here.