The producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices rose 0.3 percent month-over-month in April on a seasonally adjusted basis. The index of components and materials for construction was up 1.6 percent from its year-earlier level.
Overall prices for processed goods for intermediate demand were up 0.2 percent for the month. The largest gain was again for materials for durable manufacturing, which rose 2.2 percent for the month. The volatile price index of processed fuels and lubricants fell this month, dropping 0.2 percent. The overall processed goods for intermediate demand index was 0.5 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 2.3 percent year-over-year rise in the seasonally adjusted all-items consumer price index (CPI-U) in April.
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 March (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 | (2.6) | 8.6 | 25.6 |
| Hardwood lumber | 0.0 | 4.8 | 35.3 |
| General millworks | 0.3 | 0.9 | 32.4 |
| Soft plywood products | (2.0) | (6.2) | 63.2 |
| Hot rolled steel bars, plates and structural shapes | 0.0 | (11.9) | 34.7 |
| Copper wire and cable | 5.0 | 11.4 | 57.3 |
| Power wire and cable | 2.4 | 7.0 | 140.7 |
| Builder’s hardware | (0.2) | 2.8 | 27.8 |
| Plumbing fixtures and fittings | 1.3 | 3.9 | 23.9 |
| Furnaces and heaters | 3.2 | 2.5 | 41.8 |
| Sheet metal products | 1.1 | 2.3 | 51.7 |
| Electrical Lighting fixtures | 0.0 | 3.1 | 22.8 |
| Nails | 2.0 | (1.8) | 20.6 |
| Major appliances | 0.5 | 0.2 | 22.5 |
| Flat glass | N/A | N/A | N/A |
| Ready mix concrete | 0.2 | 1.7 | 38.7 |
| Asphalt roofing and siding | (0.8) | 0.7 | 39.7 |
| Gypsum products | (0.5) | 3.5 | 50.1 |
| Mineral wool insulation | (1.2) | 4.7 | 51.3 |
| CPI-U (unadjusted) | 0.3 | 2.3 | 24.4 |
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 April that would have been April 15. In the May report, the data collection date will be May 13.
The first chart, below, shows the price index history for wood products over the past 37 months.
The softwood lumber price index took a step back in April after its recent run up. However, despite the decline in April, it is still up 4.8 percent for the year.
The quoted market price of lumber fell in April through early May, reaching a recent low on May 2 that was 21.5 percent below its March high. The market lumber price trended lower between April 15 and May 13, dropping 3.6 percent.
Last month’s soft plywood price index saw the largest upward revision in this month’s report of the construction materials prices that we track, with a rise of 2.9 percent. Therefore, despite the reported 2.0 percent drop in this index in this month’s report, the price index is still 0.9 percent higher than the level reported last month.
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.
Of the construction materials prices that we track, last month’s price index for hot rolled steel bars saw the largest downward revision in this month’s report. It was revised lower by 2.0 percent. Therefore, this price index is down from its level in last month’s report despite being reported to be effectively unchanged this month.
The market price of hot-rolled steel coil fell between April 15 and May 13, dropping 5.8 percent. However, it is up 28.6 from its January low and this rise does not yet seem to be reflected in the reported price index for hot-rolled steel bars.
The price index for copper wire rose by the greatest percentage of the construction materials prices we track this month. Its price index is up almost 10 percent in just the last 2 months.
Looking at the underlying material price, the market price of copper has been extremely volatile this year. It opened the year at $3.99 per pound and climbed to $5.22 on March 26. It then plunged to $4.05 on April 8 before recovering to $4.60 on April 15. It closed at $4.67 on May 13.
The price index for power wire has also been moving higher recently. It is up 4.4 percent in just the last two months.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
These construction materials prices have been sticky recently. They may go several months with little or no changes and then make a sudden jump. That was the case for furnaces and heaters this month. The price index had been nearly unchanged for over a year, but it jumped 3.2 percent in April.
The price index for plumbing fixtures and fittings rose 1.3 percent after being unchanged for three months.
The full current BLS report can be found here.
