The Bureau of Labor Statistics (BLS) released its producer price index report for August. It showed that overall prices for processed goods for intermediate demand were unchanged from July, the second month in a row that this has been true. However prices in August were 6.3 percent higher than a year earlier. This compares with a 2.7 percent rise in the all-items consumer price index (CPI) in the 12 months to August.
The BLS index of materials and components for construction fell 0.1 percent from July, 2018 but was 5.8 percent higher than a year earlier.
Multihousing Pro (MHP) 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 changes in the construction material prices from a year earlier (12 Mo PC Change) and the percent change in construction material prices from June, 2018 (1 Mo PC Change).
While the July report had shown moderation in price increases, the August report shows significant price declines in many construction materials which had been experiencing rapid price increases. This is especially true for softwood lumber products. On the other hand, prices of certain metal products continued to rise. This is the case for hot rolled steel bars, plates and structural shapes and power wire and cable.
Some of the movement in construction material prices may be the result of recent actions on tariffs. Higher US tariffs on imported steel may be causing some of the price increases for steel products. Higher Chinese tariffs on US lumber products may be reducing exports, thereby increasing the supply available here and putting downward pressure on prices.
| Commodity |
12 Mo PC Change |
1 Mo PC Change |
| Softwood lumber |
5.0 |
-9.6 |
| Hardwood lumber |
3.0 |
-1.3 |
| General millworks |
2.4 |
0.0 |
| Soft plywood products |
21.8 |
-7.4 |
| Waferboard and oriented strand-board (OSB) |
7.4 |
-11.8 |
| Hot rolled steel bars, plates and structural shapes |
20.8 |
2.5 |
| Copper wire and cable |
8.5 |
-0.5 |
| Power wire and cable |
14.9 |
1.3 |
| Builder’s hardware |
2.8 |
-0.2 |
| Plumbing fixtures and fittings |
3.0 |
0.0 |
| Enameled iron and metal sanitary ware |
1.8 |
0.1 |
| Furnaces and heaters |
5.2 |
0.6 |
| Sheet metal AC ducts and stove pipe |
0.2 |
0.0 |
| Electrical Lighting fixtures |
2.3 |
-0.1 |
| Nails |
16.4 |
-0.7 |
| Major appliances |
3.3 |
-0.1 |
| Flat glass |
7.4 |
0.6 |
| Ready mix concrete |
3.7 |
-0.1 |
| Asphalt roofing and siding |
6.7 |
-0.1 |
| Gypsum products |
8.2 |
2.8 |
| Mineral wool insulation |
3.9 |
3.1 |
The chart below illustrates the price changes for softwood lumber, OSB and soft plywood over the past year and a half relative to their prices in January, 2017. It shows that the prices of OSB and of soft plywood products started to follow the downward path set by softwood lumber last month.
The final chart shows changes since July, 2017 in other construction material prices which have experienced recent significant increases. While the price of nails dropped slightly after its recent rapid rise, the prices of the other commodities shown continue to advance at a much faster rate than inflation generally.
The full BLS report can be found here.
