The Bureau of Labor Statistics (BLS) released its producer price index report for May 2021. It showed that construction materials prices were up 3.9 percent in the month, seasonally adjusted. The index was 17.3 percent higher than its year-earlier level.
Overall prices for processed goods for intermediate demand rose by 2.8 percent. The index was 21.9 percent higher than its year-ago level.
For reference, the changes in these indices compare with a 5.0 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in May. The CPI-U was up 0.6 percent for the month. Over the last 3 months, the CPI-U has risen at an annualized rate of 9.4 percent.
The shelter portion of the CPI-U was up 2.2 percent over the last 12 months.
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 April 2021 (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||196.8||21.2|
|Hot rolled steel bars, plates and structural shapes||29.0||0.7|
|Copper wire and cable||38.8||6.8|
|Power wire and cable||28.3||1.1|
|Plumbing fixtures and fittings||2.4||0.4|
|Enameled iron and metal sanitary ware||2.9||-1.4|
|Furnaces and heaters||4.8||0.3|
|Sheet metal products||12.2||0.4|
|Electrical Lighting fixtures||0.2||1.4|
|Ready mix concrete||1.9||0.0|
|Asphalt roofing and siding||12.6||3.5|
|Mineral wool insulation||9.0||3.4|
The first chart, below, shows the price history for wood products over the past 25 months. The continuing 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 is off the high that it reached in early May. The contract price hit a peak of $1,686 on May 7 before falling below $1,000 on June 14. The futures markets have followed the price down. The July 2021 contract is now below $1,000 and the January 2022 contract is now at $740, only slightly higher than its price in March.
The price of soft plywood products took a double digit jump again this month, according to the BLS. For the fourth 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 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 is also off the high it reached in early May. It closed on June 14 at $4.54 per pound, down from its recent high of $4.76, but up 27 percent from its price at the end of January 2020. BLS data indicate that the price of copper wire is up 31 percent since that time, so it would appear that the rise in the price of copper has been fully priced in. Copper futures prices have stayed in line with the spot price, with the January 2022 contract trading at $4.54 per pound.
The price of aluminum also reached a high in early May, trading at $2,540 per metric ton. It is currently down only slightly from that high, closing at $2,460 on June 14.
The price of steel has traded in a relatively narrow range since peaking on May 11. MarketWatch reports that it closed on June 14 at $1,828, down 5 percent from its recent high but up 68 percent from its level in January 2020. This increase greatly exceeds that in the prices of the steel-based products listed in our table so there may be additional increases in their prices coming. Steel futures continue to indicate that the price will decline only gradually over the next 12 months.
The prices of several of the other commodities tracked in this chart have been moving higher recently. While these prices have not grown at the rates seen for the commodities discussed above, recent price increases have left them up at or near double-digit gains on the year.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below. After rising sharply in April, the reported price changes for these items were more moderate in May. The prices of two of these categories, major appliances and enameled iron and metal sanitary ware were actually reported to fall during the month.
The full BLS report can be found here.