The producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices rose 0.1 percent month-over-month in February on a seasonally adjusted basis. The index of components and materials for construction was up 0.7 percent from its year-earlier level.
Overall prices for processed goods for intermediate demand were up 0.5 percent for the month. The largest gain was for materials for food manufacturing, which rose 2.9 percent for the month. The volatile price index of processed fuels and lubricants was only up 0.5 percent. The overall processed goods for intermediate demand index was 0.3 percent higher than its year-earlier level.
For reference, the changes in these indexes compare with a 0.2 percent month-over-month rise and a 2.8 percent year-over-year rise in the seasonally adjusted all-items consumer price index (CPI-U) in February.
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 and the percent change in price from January (1 Mo PC Change) and from a year earlier (12 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 | 1 Mo PC Change | 12 Mo PC Change | Pre-covid Change |
| Softwood lumber | 2.8 | 10.9 | 23.2 |
| Hardwood lumber | (0.0) | 5.6 | 33.4 |
| General millworks | 0.4 | 1.0 | 32.0 |
| Soft plywood products | 5.6 | (7.7) | 61.3 |
| Hot rolled steel bars, plates and structural shapes | (2.4) | (12.6) | 35.1 |
| Copper wire and cable | 2.0 | 9.6 | 42.4 |
| Power wire and cable | (0.5) | 1.5 | 130.6 |
| Builder’s hardware | 0.7 | 1.0 | 25.6 |
| Plumbing fixtures and fittings | 0.0 | 2.6 | 22.4 |
| Furnaces and heaters | 0.1 | 0.4 | 37.4 |
| Sheet metal products | 1.0 | 0.6 | 48.4 |
| Electrical Lighting fixtures | (0.0) | 4.1 | 22.5 |
| Nails | 0.3 | (3.9) | 18.3 |
| Major appliances | 0.8 | (0.2) | 22.1 |
| Flat glass | 0.7 | 2.8 | 36.2 |
| Ready mix concrete | (0.0) | 2.5 | 38.6 |
| Asphalt roofing and siding | (0.9) | (0.3) | 41.2 |
| Gypsum products | 0.0 | 3.4 | 48.5 |
| Mineral wool insulation | 0.8 | 6.0 | 52.1 |
| CPI-U (unadjusted) | 0.4 | 2.8 | 23.7 |
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 February that would have been February 11. In the March report, the data collection date will be March 11.
The first chart, below, shows the price index history for wood products over the past 37 months.
After falling last month, softwood lumber prices moved higher again in February, resuming a trend that has been in place since last July. Its 2.8 percent price rise for the month was the largest of any of the construction materials prices we track except for that of soft plywood products. The market price of lumber has been on an upward trajectory since the end of last year. This trend continued since mid-February, with the price on March 11 closing 11.2 percent higher than its February 11th close.
Last month’s soft plywood price index was revised 3.8 percent lower in this month’s report. In February, soft plywood prices rose after two months of declines. However, soft plywood prices are still below the level they were at in September of last year.
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.
For the second report in a row, a large revision was made to the prior month’s price index for hot rolled steel bars. It was revised an exceptionally large 10.8 percent lower in this month’s report. However, that may be the end of the good news on steel prices for a while as the market price of hot-rolled steel coil jumped 22 percent between February 11 and March 11.
The price index for copper wire has risen 2.9 percent over the past two months. However, it is still below the level it was at last October.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
While the price index for electrical lighting fixtures was reported to be unchanged for the month, the indexes for the last 3 months were each revised higher by 2.2 percent. These were the largest upward revisions for the construction materials prices that we track.
After being unchanged for 7 months, the price index for plumbing fixtures and fittings moved higher this month with the third largest rises of the prices we track.
Last month, the index for major appliances dropped 1.6 percent. This month, between the reported rise and the upward revision to last month’s price index value, it was up another 1.6 percent.
The full current BLS report can be found here.
