The producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices were up 0.3 percent month-over-month in January on a seasonally adjusted basis. The index of components and materials for construction was up 1.4 percent from its year-earlier level.
Overall prices for processed goods for intermediate demand were down 0.2 percent for the month. A fall in the prices of processed fuels and lubricants was the greatest factor in the decline. The processed goods for intermediate demand index was 3.8 percent lower than its year-earlier level.
For reference, the changes in these indices compare with a 3.1 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in January. The seasonally adjusted January CPI-U was up 0.4 percent from December’s level. Energy prices for consumers were down 0.9 percent for the month and 4.6 percent year-over-year. The shelter portion of the CPI-U was up 0.6 percent for the month and was 6.0 percent higher than its year-ago level. Rent of primary residence was up 0.4 percent for the month and 6.1 percent for the year.
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 first 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 December (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 provides a longer-term view of construction materials price trends.
| Commodity | 12 Mo PC Change | 1 Mo PC Change | Pre-covid Change |
| Softwood lumber | (8.3) | 1.1 | 9.3 |
| Hardwood lumber | (2.7) | 0.1 | 28.7 |
| General millworks | (0.4) | (0.0) | 28.4 |
| Soft plywood products | 4.9 | 0.0 | 75.6 |
| Hot rolled steel bars, plates and structural shapes | (4.4) | (0.2) | 50.6 |
| Copper wire and cable | 1.4 | 1.8 | 31.6 |
| Power wire and cable | 15.5 | (0.2) | 125.4 |
| Builder’s hardware | (2.6) | (1.2) | 24.0 |
| Plumbing fixtures and fittings | 1.2 | 1.1 | 19.1 |
| Enameled iron and metal sanitary ware | 2.0 | 4.5 | 21.5 |
| Furnaces and heaters | 3.8 | 1.7 | 38.9 |
| Sheet metal products | 0.8 | (0.2) | 46.1 |
| Electrical Lighting fixtures | (0.2) | (0.5) | 17.5 |
| Nails | (17.1) | 0.0 | 23.3 |
| Major appliances | 1.2 | 0.1 | 22.6 |
| Flat glass | (4.9) | (1.3) | 28.3 |
| Ready mix concrete | 7.8 | (0.4) | 32.0 |
| Asphalt roofing and siding | 2.8 | 0.3 | 40.8 |
| Gypsum products | (1.7) | (0.3) | 40.7 |
| Mineral wool insulation | (1.5) | 0.0 | 39.5 |
| CPI-U unadjusted | 3.1 | 0.5 | 19.6 |
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 January that would have been January 9. In the February report, the data collection date will be February 13.
The softwood lumber price index was reported to rise by 1.1 percent in January, the second month in a row where prices increased after a string of monthly declines.
Hardwood lumber prices were reported to be up only 0.1 percent for the month, but this was on top of a +4.7 percent revision to the price index for the month before. Compared to the preliminary price index for December reported last month, hardwood lumber had the largest increase of any of the construction materials prices that we track.
The soft plywood price index was effectively unchanged in January. However, the post-COVID price index increase for plywood remains the second largest of the materials on our list.
Looking ahead, Business Insider reported that the market price of lumber closed on January 9 at $546 and rose to $553 on February 13. Between those dates, prices were as high as $579 and as low as $526. Lumber prices in the futures markets seem to signal modest upward price pressure. The May 2024 contract closed at $575 and the July 2024 contract closed at $589 on February 13.
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 price index for power wire and cable edged lower in January. However, its year-over-year and post-COVID increases remain by far the highest of any of the construction materials prices that we track.
The price index for copper wire and cable moved 1.8 percent higher for the month, a 24 percent annualized rate of increase. The price index for hot rolled steel bars was reported to fall 0.2 percent on top of a -1.8 percent revision to the price index for the month before.
Looking ahead at prices for underlying materials, MarketWatch reported that the NYSE American steel index trended lower for the month. It closed at $2,114 on January 9 and closed at $2,048 on February 13. Steel futures were also lower. The May 2024 contract closed 5.3 percent lower on February 13 than it did on January 9 while the July 2024 contract closed 1.7 percent lower.
The price of copper closed at $3.74 per pound on February 13 down $0.02 since January 9. It had closed as high as $3.90 per pound between those dates. Its low for the period was $3.69 per pound.
The price of aluminum is down from our last reading. It closed on February 13 at $2,225, down $25 from its level on January 9. However, it had closed as high as $2,280 and as low as $2,160 between those dates.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
The construction materials prices for the commodities shown in this chart have been relatively stable for the past year. The largest price gain over that time is only 3.8 percent for furnaces and heaters. The greatest decline is only -0.2 percent for electric lighting fixtures.
Once again this month, the monthly change in the construction materials price index for enameled iron and metal sanitary ware was entirely a result of a revision to the prior month’s index. The price index for January is exactly the same as the preliminary value for December reported last month.
For the first time since April, the reported construction materials price index for plumbing fixtures and fittings has changed. It rose 1.1 percent for the month.
The full current BLS report can be found here.
