Construction materials prices jump again in March

lumber prices

The Bureau of Labor Statistics (BLS) released its Producer Price Index report for March 2021. It showed that construction materials prices were up 2.4 percent in the month, seasonally adjusted. The index of materials and components for construction was 9.9 percent higher than its year-earlier level.

Overall prices for processed goods for intermediate demand rose by 4.0 percent. This index was 12.5 percent higher than its year-ago level.

For reference, the changes in these indices compare with a 2.6 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in March. The CPI is being driven by rising energy prices, which have been surging since December and were up over 13 percent in the year to March.

The shelter portion of CPI-U was up 1.7 percent in the year to March.

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 February 2021 (1 Mo PC Change).

Commodity 12 Mo PC Change 1 Mo PC Change
Softwood lumber 83.4 6.8
Hardwood lumber 27.3 9.0
General millworks 4.4 1.4
Soft plywood products 101.3 16.2
Hot rolled steel bars, plates and structural shapes 20.3 6.0
Copper wire and cable 26.7 4.1
Power wire and cable 14.3 0.5
Builder’s hardware 2.3 1.2
Plumbing fixtures and fittings 1.9 1.5
Enameled iron and metal sanitary ware 2.9 -0.9
Furnaces and heaters 0.2 0.8
Sheet metal products 6.3 3.9
Electrical Lighting fixtures -2.7 -0.7
Nails 3.1 3.1
Major appliances 2.0 -0.6
Flat glass 5.0 2.2
Ready mix concrete 0.7 0.4
Asphalt roofing and siding 4.3 2.5
Gypsum products 6.2 1.4
Mineral wool insulation 6.4 0.5

The price changes reported by the BLS for wood products are shown in the first chart, below.

lumber price changes

After a pullback early in the month, lumber prices were up again in March. The market price of lumber dropped as low as $854 on March 17, but then began a climb that continued into early April. It closed on April 9 at $1,125.50.

The futures markets are signaling that the lumber price will remain elevated for some time. The May 2021 contract, which was trading around $860 a month ago is now at $1,125. The January 2022 contract, which was trading at $725 a month ago closed at $845 on April 9.

The price of soft plywood products took a double digit jump this month, according to the BLS. For the second report in a row, its monthly and annual price gains exceeded those for framing lumber.

The next chart, below, shows the recent price history of several other construction materials. The prices for copper wire and hot rolled steel continued to rise sharply during the month. The price of power wire also rose, but less sharply than has been the case in recent months.

construction materials prices

The price of copper hit a recent high on February 25 at $4.33 per pound. The price plateaued in March, trading between $3.98 and $4.14 per pound. Copper futures prices have stayed in line with the spot price, trading at $4.09 per pound.

The price of aluminum has continued to climb from the low point it reached last April as economies around the world were shut down. The price of aluminum is now up about 21 percent over the last 12 months and is up 54 percent from its low point last year.

The price of steel has also surged recently, rising strongly from the low point is reached when the lockdowns were imposed a year ago. MarketWatch reports that steel is now trading at its highest price level since 2012 and is up nearly 50 percent since January 2020. Steel futures continue to indicate that the price will remain strong into the summer but may ease later in the year.

The prices of most other commodities tracked in this chart have been relatively stable despite the market disruptions caused by COVID-19.

Price changes for several of the more finished goods from our sample are illustrated in the final chart, below. The prices of these items seem to be continuing their recent trend of growing at a rate that is slightly above the general rate of inflation in the economy

construction materials prices

The full BLS report can be found here.