The Bureau of Labor Statistics (BLS) released its producer price index report for December 2019. It showed that overall prices for processed goods for intermediate demand rose by 0.1 percent in the month. However, the index was 1.7 percent lower than its year-ago level. Excluding food and energy, the price index for processed goods for intermediate demand was down by 0.2 percent for the month.
The BLS price index of materials and components for construction was up 0.2 percent from November 2019, before seasonal adjustment. It was also 0.4 percent higher than its year-earlier level.
For reference, the changes in these indices compare with a 2.3 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in December.
Yield 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 November 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 | 4.8 | -0.2 |
| Hardwood lumber | -10.6 | -0.7 |
| General millworks | 1.7 | 0.2 |
| Soft plywood products | -11.8 | -0.2 |
| Hot rolled steel bars, plates and structural shapes | -16.4 | -3.4 |
| Copper wire and cable | -1.0 | 1.2 |
| Power wire and cable | -2.0 | 1.8 |
| Builder’s hardware | 1.6 | 0.8 |
| Plumbing fixtures and fittings | 4.1 | 0.0 |
| Enameled iron and metal sanitary ware | 3.8 | 6.5 |
| Furnaces and heaters | 7.6 | 2.0 |
| Sheet metal products | -1.3 | 0.0 |
| Electrical Lighting fixtures | 7.2 | 0.0 |
| Nails | -1.0 | 0.0 |
| Major appliances | 4.0 | 0.2 |
| Flat glass | 2.3 | 0.0 |
| Ready mix concrete | 2.4 | -0.1 |
| Asphalt roofing and siding | -0.8 | 0.1 |
| Gypsum products | -5.2 | 0.0 |
| Mineral wool insulation | -5.7 | 0.1 |
The story for the year has been the moderation in the price increases seen for construction materials, particularly when compared to the price surges seen in late 2017 and early 2018. Lumber prices, in particular are down from their recent highs and have been trading in a narrow range recently. Price changes for softwood products are shown in the first chart.
The second chart, below, shows the recent price history of several other construction commodities whose prices increased rapidly in early to mid-2018, possibly in response to tariff increases. Recently these prices have stabilized, albeit for some of them at levels significantly higher than they were 30 months ago. Still, for asphalt roofing and siding and for hot rolled steel, prices are now lower on an inflation adjusted basis than they were in mid-2017.
As has been the case recently, price inflation for construction materials has been higher in more finished goods. Prices for these commodities have not seen the rapid run-ups experienced with some of the construction materials discussed above, but their continued steady rise has left them with about the same total increases over the last 30 months as for the materials tracked in the second chart, above. And, unlike some of the more primary construction materials, the prices of some of the finished goods have continued to rise. Prices of furnaces and heaters are up 7.6 percent on the year while prices of electrical lighting fixtures are up 7.2 percent. These price changes are illustrated in the final chart, below.
The full BLS report can be found here.
