The Bureau of Labor Statistics (BLS) released its producer price index report for January, 2019. It showed that overall prices for processed goods for intermediate demand fell by 1.4 percent from December, largely driven by declines in energy prices. Prices for these goods were up 0.9 percent on a year-over-year basis. This compares with a 1.6 percent rise in the all-items consumer price index (CPI) for the 12 months ending in January.
The BLS price index of materials and components for construction was up 0.2 percent from December, 2018, and was 2.1 percent higher than a year earlier.
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 December, 2018 (1 Mo PC Change).
|Commodity||12 Mo PC Change||1 Mo PC Change|
|Soft plywood products||-10.0||-0.6|
|Waferboard and oriented strand-board (OSB)||-18.8||-6.1|
|Hot rolled steel bars, plates and structural shapes||23.7||1.9|
|Copper wire and cable||N/A||N/A|
|Power wire and cable||8.2||-1.1|
|Plumbing fixtures and fittings||5.5||0.4|
|Enameled iron and metal sanitary ware||0.3||0.2|
|Furnaces and heaters||7.3||3.5|
|Sheet metal AC ducts and stove pipe||0.6||0.0|
|Electrical Lighting fixtures||7.5||0.0|
|Ready mix concrete||2.5||0.9|
|Asphalt roofing and siding||9.4||-1.2|
|Mineral wool insulation||7.0||1.2|
The data show that the prices of softwood lumber products have dropped significantly since peaking in the middle of last year, reversing an earlier trend. While the prices of softwood lumber and soft plywood products seem to have reached a plateau, the price of oriented strandboard (OSB) has continued to decline. This is illustrated in the first chart, below, which shows the prices of softwood lumber, OSB and soft plywood relative to their levels in January, 2017. The rapid increases in the prices of wood products had been putting upward pressure on construction prices so their recent moderation comes as welcome news.
By contrast, the prices of certain other construction materials have been rising lately, particularly when viewed on a year-over-year basis. This is shown in the chart, below, which plots the relative price changes since July, 2017 for a selected group of construction materials. While prices for many of them were rising rapidly last spring, they have stabilized recently. Still, the prices for steel products bear watching.
The full BLS report can be found here.