The Bureau of Labor Statistics (BLS) released its producer price index report for April 2021. It showed that construction materials prices were up 2.1 percent in the month, seasonally adjusted. The construction materials price index was 12.9 percent higher than its year-earlier level.
Overall prices for processed goods for intermediate demand rose by 1.6 percent. The index was 18.4 percent higher than its year-earlier level.
For reference, the changes in these indices compare with a 4.2 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in April. The CPI-U was up 0.8 percent for the month.
Yield 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 2021 (1 Mo PC Change).
|Commodity||12 Mo PC Change||1 Mo PC Change|
|Soft plywood products||134.6||14.3|
|Hot rolled steel bars, plates and structural shapes||26.3||5.1|
|Copper wire and cable||30.9||2.0|
|Power wire and cable||25.6||9.6|
|Plumbing fixtures and fittings||2.0||0.1|
|Enameled iron and metal sanitary ware||4.6||1.5|
|Furnaces and heaters||4.3||3.5|
|Sheet metal products||11.5||4.8|
|Electrical Lighting fixtures||-1.1||2.8|
|Ready mix concrete||2.0||1.5|
|Asphalt roofing and siding||7.4||1.5|
|Mineral wool insulation||6.4||-0.2|
The first chart, below, shows the price history for wood products over the past 25 months. The divergence in the price histories of different wood products may indicate that the price increases are being driven more by limited mill capacity than by a shortage of raw timber.
The market price of lumber continued its inexorable rise in April. The contract price opened the month of April at $1,012 per thousand board feet and closed the month at $1,500. It then hit a peak of $1,686 on May 7 before dropping back to the $1,600 range. The futures markets are signaling that lumber prices will remain elevated for some time. The July 2021 contract is now at $1,487. The January 2022 contract, which was trading at $725 in March is now at $1,103.
The price of soft plywood products took a double digit jump again this month, according to the BLS. For the third report in a row, its monthly and annual price gains exceeded those for framing lumber.
The next chart, below, shows the recent history of several other construction materials prices. The prices for power wire and hot rolled steel continued to rise sharply during the month. The price of copper wire also rose, but less sharply than has been the case in recent months.
The price of copper went on a run in April, rising from around $4.00 per pound at the beginning of the month to a price of $4.67 on April 30. It continued to run up in early May, hitting a high of $4.76 per pound on May 11. Copper futures prices have stayed in line with the spot price, with the January 2022 contract trading at $4.73 per pound.
The price of aluminum has moved sharply higher since February. A metric ton of aluminum traded for $1,969 on February 1 and hit a high of $2,540 on May 7. The price of aluminum is now up about 38 percent since January 2020 and up 70 percent from its low point in April 2020.
The price of steel has also surged recently, rising strongly from the low point it reached when the lockdowns were imposed a year ago. MarketWatch reports that steel is now trading at its highest price level since 2011, with the NYSE steel index closing on May 11 at $1927. The index is up nearly 75 percent since January 2020. Steel futures indicate that the price will remain high into the summer, with the June 2021 contract trading at $1,615. Futures contract prices indicate that steel prices are not expected to return to their January 2020 levels until the middle of 2022.
The prices of the other commodities tracked in this chart are now starting to move higher, particularly gypsum products and asphalt roofing and siding.
Price changes for some of the more finished construction materials from our sample are illustrated in the final chart, below. The prices of several of these items jumped during April with furnaces and heaters and electrical lighting fixtures in the lead.
The full BLS report can be found here.