The November producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices fell 0.2 percent in the month, seasonally adjusted, the third monthly decline in a row. However, the index was still 10.0 percent higher than its year-earlier level.
Overall prices for processed goods for intermediate demand fell by 0.9 percent in the month driven by falling fuel prices. The processed goods for intermediate demand index was 7.7 percent higher than its year-ago level.
For reference, the changes in these indexes compare with a 7.1 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in November. The seasonally adjusted October CPI-U was up 0.1 percent from October’s level. The shelter portion of the CPI was up 0.6 percent for the month and was 7.1 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 October 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 |
| Softwood lumber | (3.9) | (0.9) | 33.0 |
| Hardwood lumber | (18.2) | (7.4) | 21.6 |
| General millworks | 11.5 | (0.2) | 29.1 |
| Soft plywood products | 6.0 | (3.1) | 82.2 |
| Hot rolled steel bars, plates and structural shapes | 7.1 | (0.7) | 69.8 |
| Copper wire and cable | (12.1) | 0.5 | 21.9 |
| Power wire and cable | 3.2 | (1.4) | 68.6 |
| Builder’s hardware | 5.7 | 0.1 | 24.6 |
| Plumbing fixtures and fittings | 9.9 | 0.0 | 15.8 |
| Enameled iron and metal sanitary ware | 17.2 | 0.6 | 21.1 |
| Furnaces and heaters | 18.4 | 2.9 | 35.8 |
| Sheet metal products | 10.1 | (1.3) | 45.8 |
| Electrical Lighting fixtures | 5.7 | 0.0 | 17.5 |
| Nails | 11.9 | 0.0 | 48.7 |
| Major appliances | 8.6 | (1.8) | 18.1 |
| Flat glass | 25.0 | 2.3 | 40.9 |
| Ready mix concrete | 12.3 | 1.0 | 21.1 |
| Asphalt roofing and siding | 12.5 | 0.7 | 36.2 |
| Gypsum products | 16.6 | 0.4 | 43.3 |
| Mineral wool insulation | 14.8 | (0.2) | 40.1 |
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 November 2022 that would have been November 15.
The prices of the four categories of wood products we track fell again this month. In addition, last month’s reported prices for softwood lumber and for soft plywood products were revised lower in this month’s report by 1.5 percent and by 2.0 percent respectively. Again this month, 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 trended lower throughout the month of November. It closed on December 8 at $413, down $42 since November 15. Lumber prices in the futures markets have also fallen since last month. The January 2023 futures contract closed at $413 on December 8, down $2 since our last report. The March 2023 contract also closed at $413, down $21 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.
The reported month-over-month changes in these construction materials prices were modest, but this is partly because revisions to last month’s reported prices muted this month’s changes. For example, while the price of power wire was reported to fall by 1.4 percent, this is in addition to last month’s price for this commodity being revised downward by 3.5 percent. While the price of copper wire was reported to rise by 0.5 percent, this is in addition to an upward revision of last month’s price for this commodity of 0.8 percent.
Flat glass is a material which does not appear in any of our charts but one whose price has been moving higher recently. Because of a 6.1 percent upward revision to last month’s reported price, its price this month is up the most compared to the preliminary value reported last month of any of the construction materials we track, rising 8.6 percent. It is also the material whose price is up the most on a year-over-year basis.
Looking at prices for underlying materials, MarketWatch reports that the NYSE American steel index has been moving higher over the last two months from its recent low in late September. It closed on December 8 at $1,781, up $65, or 4 percent, from its level of a month ago. Steel futures have also moved higher since mid-November. The January 2023 contract closed on December 8 up 4 percent from its level on November 15.
The price of copper fell in mid-November but recovered by the end of the month. It closed at $3.82 per pound on November 15 but it closed at $3.88 per pound on December 8.
The price of aluminum moved higher since our last report. It closed on December 8 at $2,499, up $65 since our last report.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
All of last month’s reported prices for these commodities were revised lower, if only slightly, in this month’s report. Compared to the preliminary prices reported last month, the only one of these commodities that saw its price rise was furnaces and heaters. Its 2.9 percent price rise was the largest compared to the revised price for October and the second largest compared to the preliminary price for October reported last month of any of the items we track.
The full BLS report can be found here.
