Construction material prices steady in July

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The Bureau of Labor Statistics (BLS) released its producer price index report for July 2019. It showed that overall prices for processed goods for intermediate demand rose by 0.2 percent in the month. However, the index was 2.0 percent lower than its year-ago level. The rise for the month was driven by volatile energy prices which rose by 2.2 percent. Excluding food and energy, the price index for processed goods for intermediate demand was down by 0.2 percent.

The BLS price index of materials and components for construction was up 0.1 percent from June 2019, before seasonal adjustment. It was 0.9 percent higher than its year-earlier level showing that the rapid run-up in construction material prices seen in the last two years has moderated.

The changes in these indices compare with a 1.8 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in July.

Multihousing Pro (PRO) compiled the BLS reported price changes for our standard list of construction commodities. 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 June 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

-19.5

1.7

Hardwood lumber

-8.8

-2.4

General millworks

2.2

0.0

Soft plywood products

-24.8

-6.0

Hot rolled steel bars, plates and structural shapes

-3.9

-3.7

Copper wire and cable

-7.3

-2.0

Power wire and cable

-1.6

-2.9

Builder’s hardware

3.0

0.1

Plumbing fixtures and fittings

6.5

0.1

Enameled iron and metal sanitary ware

1.0

-0.4

Furnaces and heaters

11.0

0.0

Sheet metal products

1.5

-0.1

Electrical Lighting fixtures

7.9

1.9

Nails

-1.5

0.1

Major appliances

3.6

-0.7

Flat glass

0.7

0.4

Ready mix concrete

3.5

0.1

Asphalt roofing and siding

5.0

0.9

Gypsum products

-7.3

-2.2

Mineral wool insulation

-0.8

1.2

 

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.

The BLS has dropped Oriented Strand Board (OSB) from its report so the most recent BLS price reading on this class of structural panels is now several months old. However, lumber market information site, Random Lengths, publishes a structural panel composite price index tracking these sorts of products. That index is down 4.1 percent on the month and down 28 percent compared to its year-earlier level.

The construction material prices which surged last year are illustrated in the next chart, below. The chart shows that they have largely stabilized since last fall and some of them have actually fallen recently. However, gypsum products are the only ones whose prices have returned to their levels before the recent surge.

As has been the case lately, the construction material prices which have risen the most in recent months are for more finished goods. Prices of furnaces and heaters have risen the most over the last 12 months, with a gain of 11.0 percent. They are followed by electrical lighting fixtures, which have risen in price by 7.9 percent in the last year and 1.9 percent in the last month. Plumbing fixtures and fittings have also jumped in price over the last year, rising 6.5 percent in that time.

The full BLS report can be found here.