The Bureau of Labor Statistics (BLS) released its producer price index report for April, 2019. It showed that overall prices for processed goods for intermediate demand fell by 0.1 percent in the month after rising 0.8 percent in March. The index in April was 0.7 percent higher than its year-ago level. This compares with a 2.0 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in April.
The BLS price index of materials and components for construction was down 0.1 percent from March 2019, after seasonal adjustment. It was 2.6 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 February 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|
|Soft plywood products||-17.1||0.7|
|Waferboard and oriented strand-board (OSB)||N/A||N/A|
|Hot rolled steel bars, plates and structural shapes||9.6||0.4|
|Copper wire and cable||-5.5||-2.3|
|Power wire and cable||7.5||-0.3|
|Plumbing fixtures and fittings||6.2||0.0|
|Enameled iron and metal sanitary ware||1.2||0.0|
|Furnaces and heaters||8.7||1.4|
|Sheet metal AC ducts and stove pipe||N/A||N/A|
|Electrical Lighting fixtures||6.1||0.9|
|Ready mix concrete||1.6||2.1|
|Asphalt roofing and siding||7.5||2.7|
|Mineral wool insulation||5.9||1.5|
Lumber prices have rebounded slightly from the lows they reached last winter but remain well off of their peaks from last summer. Price changes for three important classes of lumber are illustrated in the first chart, below.
For the third month in a row, the BLS has not reported on the price of waferboard and OSB. However, a lumber industry trade publication, Random Lengths, reports that their structural panel composite price index is down 37 percent over the last 12 months.
Several other construction materials, often metals based, saw rapid price increases last year. While the surges in the prices of these construction materials have ended, their prices have not fallen to their earlier levels. This is illustrated in the next chart, below.
Part of the increase in the prices of metals in the US has been the imposition of tariffs on imports from our trading partners. Recently, the US eliminated tariffs on imports of steel and aluminum from Canada and Mexico, which may help moderate prices here. On the other hand, tariffs remain in place on Chinese steel and that dispute does not seem to be close to resolution, so there may be volatility ahead for metals prices.
The full BLS report can be found here.