The October producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices fell 0.4 percent in the month, seasonally adjusted, matching last month’s decline. However, the index was 12.2 percent higher than its year-earlier level.
Overall prices for processed goods for intermediate demand fell by 0.2 percent in the month as rising fuel prices were offset by falling prices for processed materials and for food and feeds. The processed goods for intermediate demand index was 10.1 percent higher than its year-ago level.
For reference, the changes in these indices compare with a 7.7 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in October. The seasonally adjusted October CPI-U was up 0.4 percent from September’s level. The shelter portion of the CPI was up 0.8 percent for the month and was 6.9 percent higher than its year-ago level.
Yield Pro compiled the BLS reported changes for our standard list of construction materials prices. These are prices of materials which 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 September 2022 (1 Mo PC Change). If no price data is available for a given commodity, the change is listed as N/A.
The pre-COVID column lists the change in the current construction materials prices relative to the average of prices from December 2019 through February 2020, before the pandemic impacted the economy. This may give a truer idea of the magnitude of the recent price increases for materials, such as lumber, whose prices were already rising sharply last year, than does the 12 Mo PC Change column.
|Commodity||12 Mo PC Change||1 Mo PC Change||Pre-covid Change|
|Soft plywood products||19.5||(0.7)||91.8|
|Hot rolled steel bars, plates and structural shapes||9.8||(1.3)||71.0|
|Copper wire and cable||(11.1)||(1.0)||20.3|
|Power wire and cable||10.8||2.1||77.2|
|Plumbing fixtures and fittings||10.4||0.5||15.8|
|Enameled iron and metal sanitary ware||19.4||1.5||23.6|
|Furnaces and heaters||17.7||0.5||32.0|
|Sheet metal products||13.4||(0.1)||46.9|
|Electrical Lighting fixtures||6.0||0.0||17.5|
|Ready mix concrete||11.8||(0.0)||19.5|
|Asphalt roofing and siding||15.2||(0.3)||35.1|
|Mineral wool insulation||14.6||(0.2)||40.4|
The first chart, below, shows the price index history for wood products over the past 37 months. Note that the prices used by the BLS in compiling the indexes are collected on the Tuesday of the week containing the 13th day of the month. In October 2022 that would have been October 11.
The prices of wood products continued their downward trend this month, with prices falling for all four of the lumber categories we track despite revisions to last month’s price indexes being mostly to the downside. However, plywood remains the commodity with the largest price gain compared to its pre-pandemic level of any of the construction materials prices we track.
Markets Insider reported that the market price of lumber rose in early October but gave up most of the gain by the end of the month. It closed on November 14 at $448, down $31 since October 11. Lumber prices in the futures markets are down from last month’s reading, despite moving higher in recent days. The January 2023 futures contract closed at $415 on November 14, down $38 since our last report. The March 2023 contract closed at $434, down $57 since our last report.
The next chart, below, shows the recent history of several other construction materials prices. These are relatively simple commodities whose prices are strongly driven by those of the materials of which they are comprised.
All of these construction materials prices were flat or down for the month with the exception of the price for power wire and cable which continued its recent climb.
The biggest price move this month among these commodities was for copper wire and cable, which fell 1 percent on top of a downward revision of the previous month’s price index of 1.6 percent. However, as noted below, the price of copper has been moving higher recently so this trend may not be sustained next month. The 2.1 percent rise in the price index for power wire and cable was the largest monthly increase of any of the construction materials prices we track.
MarketWatch reports that the NYSE American steel index has been moving higher lately after reaching a recent low in late September. It closed on November 14 at $1,716, up $241, or 16 percent, from its level of a month ago. However, steel futures have moved lower since mid-October. The January 2023 contract closed on November 14 down 3 percent from its level on October 11.
The price of copper ran up in early November. While it closed at $3.46 per pound on October 11, it closed at $3.83 per pound on November 14.
The price of aluminum dipped in late October but rebounded in November. It closed on November 14 at $2,434, up $198 since our last report.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
These construction materials prices generally continued their steady move higher. The reported 1.5 percent rise in the price index for enameled iron and metal sanitary ware was due to an equal sized downward revision to the previous month’s price index. While the price index for electrical lighting fixtures was reported to be unchanged for the month, the previous month’s price index was revised downward by 1.1 percent. The 0.4 percent decline in the price index for major appliances was on top of a 0.3 percent downward revision to its price index for the previous month.
The full BLS report can be found here.