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 July on a seasonally adjusted basis. The intermediate demand index of components and materials for construction was up 2.6 percent from its year-earlier level.
After being unchanged last month and up only 0.1 percent the month before, overall prices for processed goods for intermediate demand rose 0.8 percent this month. The largest gain was for processed fuels and lubricants, which rose 2.2 percent for the month. The overall processed goods for intermediate demand index was 2.1 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 2.7 percent year-over-year rise in the seasonally adjusted all-items consumer price index (CPI-U) in July.
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 June (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 | (1.9) | 7.7 | 17.1 |
| Hardwood lumber | 0.6 | 5.4 | 38.0 |
| General millworks | 0.8 | 2.3 | 33.9 |
| Soft plywood products | (2.0) | (0.9) | 52.6 |
| Hot rolled steel bars, plates and structural shapes | 4.7 | 2.4 | 51.0 |
| Copper wire and cable | 4.9 | 12.2 | 63.8 |
| Power wire and cable | N/A | N/A | N/A |
| Builder’s hardware | 2.5 | 10.0 | 37.2 |
| Plumbing fixtures and fittings | 0.7 | 5.3 | 26.1 |
| Furnaces and heaters | 0.8 | 8.0 | 48.4 |
| Sheet metal products | 0.0 | 4.5 | 54.5 |
| Electrical Lighting fixtures | N/A | N/A | N/A |
| Nails | 0.9 | 3.4 | 22.5 |
| Major appliances | 0.6 | 2.6 | 24.7 |
| Flat glass | 2.5 | 5.3 | 39.5 |
| Ready mix concrete | (0.5) | 0.5 | 37.1 |
| Asphalt roofing and siding | (0.7) | 1.3 | 44.0 |
| Gypsum products | (0.0) | 0.8 | 49.0 |
| Mineral wool insulation | (1.0) | (0.6) | 48.6 |
| CPI-U (unadjusted) | 0.2 | 2.7 | 25.3 |
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 July that would have been July 15. In the August report, the data collection date will be August 12.
The first chart, below, shows the price index history for wood products over the past 37 months.
The softwood lumber price index moved lower again this month, falling 1.9 percent. It is now down 9.2 percent from its recent high in March.
Last month’s soft plywood price index was revised 2.5 percent lower this month, the largest revision to the construction material prices that we track. Its reported price index was down 2.0 percent on top of that revision for a total drop of 4.5 percent from last month’s reported index value.
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 hot-rolled steel bars was reported to jump 4.7 percent this month, with only a small downward revision being made to last month’s price index. This index is up 11.7 percent over the last 3 months.
The price index for copper wire was reported to climb 4.9 percent this month. This was on top of a 1.7 percent upward revision to last month’s index and 1 percent or higher upward revisions being made to the price indexes for March through May.
Again this month, no price index was reported for power wire. However, significant revisions were made to its reported price indexes for April and May. They were revised higher by 4.1 percent and 3.4 percent respectively.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
The price index for plumbing fixtures and fittings resumed its rise this month after showing no change in last month’s report. It has established a strong upward trend since January.
The price index for major appliances was reported to be up 0.6 percent for the month. However, last month’s index was revised lower by 0.7 percent, so its July price index is slightly lower than that reported last month.
After a long period of price stability, the price index for furnaces and heaters has been rising rapidly recently. While its price index was reported to rise only modestly this month, last month’s index was revised higher by 2.4 percent, so its index is now 3.2 percent higher than that reported last month.
The full current BLS report can be found here.
