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 June on a seasonally adjusted basis. The index of components and materials for construction was up 2.4 percent from its year-earlier level.
Overall prices for processed goods for intermediate demand were up 0.1 percent for the month. The largest gain was for processed fuels and lubricants to manufacturing industries, which rose 1.3 percent for the month. The overall processed goods for intermediate demand index was 1.9 percent higher than its year-earlier level.
For reference, the changes in these indexes compare with a 0.3 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 June.
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 May (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 | 19.3 |
| Hardwood lumber | (0.2) | 4.9 | 37.2 |
| General millworks | 0.3 | 1.3 | 32.9 |
| Soft plywood products | (1.1) | (0.2) | 59.8 |
| Hot rolled steel bars, plates and structural shapes | 1.3 | (2.7) | 44.4 |
| Copper wire and cable | 1.3 | 0.9 | 53.5 |
| Power wire and cable | N/A | N/A | N/A |
| Builder’s hardware | 4.7 | 10.2 | 37.5 |
| Plumbing fixtures and fittings | 0.0 | 4.5 | 25.3 |
| Furnaces and heaters | 1.2 | 4.7 | 43.8 |
| Sheet metal products | 1.2 | 3.6 | 53.9 |
| Electrical Lighting fixtures | 0.9 | 3.7 | 23.9 |
| Nails | 1.2 | 1.1 | 22.2 |
| Major appliances | 0.5 | 2.2 | 24.8 |
| Flat glass | 1.2 | 3.6 | 36.3 |
| Ready mix concrete | (0.4) | 2.0 | 38.6 |
| Asphalt roofing and siding | (0.0) | 2.4 | 45.0 |
| Gypsum products | 0.0 | 1.7 | 50.2 |
| Mineral wool insulation | (1.0) | 0.0 | 49.8 |
| CPI-U (unadjusted) | 0.3 | 2.7 | 25.1 |
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 June that would have been June 10. In the July report, the data collection date will be July 15.
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. It is down 7.5 percent from its recent high in March. While its price is still up year-over-year, its price rise is still below the general rate of inflation as defined by the CPI-U since our reference point in July 2017.
Last month’s soft plywood price index was revised 0.2 percent higher this month. Therefore, while its price index was reported to be down 1.1 percent from last month’s revised value, it is down 0.9 percent from the price index in last month’s 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 price index for hot-rolled steel bars was reported to rise 1.3 percent this month, putting it in the middle of the pack compared to the other construction material prices that we track. However, its price index for last month saw the largest upward revision in this month’s report. Therefore, it had the second largest rise compared to the preliminary price index in last month’s report with a gain of 3.9 percent. It trailed only builder’s hardware in this regard.
The price index for copper wire was reported to rise 1.3 percent this month. However, this reported rise was aided by last month’s index being revised lower by 0.9 percent.
No price index for power wire was reported this month. However, last month’s reported price index was revised higher by 1.6 percent.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
While the price index for plumbing fixtures and fittings rose 1 percent or more in each of the last two reports, it was reported to be unchanged this month.
The price index for major appliances was reported to be up 0.6 percent for the month. However, last month’s index was revised higher by 0.8 percent, so its June price index is 1.3 percent higher than the level reported last month.
The price index for furnaces and heaters was reported to rise 1.3 percent this month. It is up 4.3 percent since March.
The full current BLS report can be found here.
