Key construction material prices decline in September

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The Bureau of Labor Statistics (BLS) released its producer price index report for September. It showed that overall prices for processed goods for intermediate demand were unchanged from August, the third month in a row that this has been true. However prices in September were 5.8 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 price index of materials and components for construction rose 0.2 percent from August, 2018 and was 5.8 percent higher than a year earlier.

Multihousing 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 August, 2018 (1 Mo PC Change).

The August report had shown significant price declines in many commodities which had been experiencing rapid price increases, especially lumber products. That trend continued in September, indicating that the recent price declines were not a fluke. Even the prices for certain metal products, which had been rising rapidly, moderated somewhat in September.

Commodity 12 Mo PC Change 1 Mo PC Change
Softwood lumber 5.4 -0.4
Hardwood lumber 1.3 -2.0
General millworks 2.4 0.0
Soft plywood products 14.8 -3.3
Waferboard and oriented strand-board (OSB) 1.8 -5.2
Hot rolled steel bars, plates and structural shapes 20.0 0.8
Copper wire and cable 1.0 -5.1
Power wire and cable 11.5 -4.1
Builder’s hardware 3.6 2.0
Plumbing fixtures and fittings 2.0 0.0
Enameled iron and metal sanitary ware 1.6 -0.2
Furnaces and heaters 4.6 0.0
Sheet metal AC ducts and stove pipe 0.2 0.0
Electrical Lighting fixtures 2.3 0.0
Nails 16.2 -0.1
Major appliances 4.5 1.3
Flat glass 7.3 -0.1
Ready mix concrete 3.8 0.2
Asphalt roofing and siding 9.3 3.1
Gypsum products 7.9 -0.5
Mineral wool insulation 6.4 2.4

 

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 may have peaked for this construction season given their recent declines. While these prices also fell in the autumn of last year, the decline is happening earlier this year.

lumber prices

The final chart shows the price changes since July, 2017 of other commodities which have experienced recent significant price increases. The chart shows the recent slow down in the rates of price increases but the prices for these items is still up significantly in the last year.

construction materials

The full BLS report can be found here.