The Bureau of Labor Statistics (BLS) released its producer price index report for May 2020. It showed that overall prices for processed goods for intermediate demand rose by 0.1 percent, breaking a string of five monthly declines. While falling energy prices accounted for much of the recent decline, a 6.4 percent surge in food prices drove the index up this month. Excluding food and energy, the price index for processed goods for intermediate demand was down by 0.6 percent for the month. The full index was 6.8 percent lower than its year-ago level.
By contrast, the BLS price index of materials and components for construction was unchanged from April, before seasonal adjustment. It was 0.5 percent higher than its year-earlier level.
For reference, the changes in these indices compare with a 0.1 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in May. The index fell 0.1 percent in May, the third monthly drop in a row.
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 March 2020 (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 | 3.2 | 3.9 |
| Hardwood lumber | -7.0 | -0.1 |
| General millworks | 1.6 | 0.2 |
| Soft plywood products | -10.9 | -5.5 |
| Hot rolled steel bars, plates and structural shapes | -11.6 | -1.6 |
| Copper wire and cable | -4.5 | 2.2 |
| Power wire and cable | -5.3 | -1.5 |
| Builder’s hardware | 2.2 | 0 |
| Plumbing fixtures and fittings | 2.4 | 0.3 |
| Enameled iron and metal sanitary ware | 3.4 | 0.2 |
| Furnaces and heaters | 1.9 | -0.6 |
| Sheet metal products | -0.4 | -0.4 |
| Electrical Lighting fixtures | 7.8 | 0.3 |
| Nails | 0.1 | 0 |
| Major appliances | 0.3 | -0.2 |
| Flat glass | 0.1 | -0.2 |
| Ready mix concrete | 2.6 | -0.4 |
| Asphalt roofing and siding | -0.3 | -1.3 |
| Gypsum products | -0.5 | -0.2 |
| Mineral wool insulation | 3.4 | 1.8 |
Lumber prices have been relatively stable for the last year. There has been some volatility in the reported prices indices recently, but it is unclear whether this is due to actual price changes or to difficulties in collecting accurate data cause by the COVID-19 related shutdowns. Regardless, prices for the three categories of lumber products we track are now reported to be lower than they were in the summer of 2017.
The second chart, below, shows the recent price history of several other construction materials. Once again, the prices of these construction materials have been relatively stable over the last half year, although some of them are now more expensive than they were in the summer of 2017 in both absolute and in inflation adjusted terms.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below. Electrical lighting fixtures again showed the largest annual price increase in this report with a rise of 7.8 percent, largely due to a surge in their prices last summer. However, over the last 6 months, the prices of these good have been relatively stable.
The full BLS report can be found here.
