The Bureau of Labor Statistics (BLS) released its Producer Price Index for May last week. It showed that overall prices for processed goods for intermediate demand were up 1.5 percent in May and they increased 6.3 percent from a year earlier. Both the monthly and the annual increases were at the highest levels reported since 2011 and were driven by higher prices for energy.
The BLS index of materials and components for construction advanced 1.1 percent from April, 2018 and was 5.9 percent higher than a year earlier. Both increases are higher than those reported last month.
Multihousing Pro compiled the BLS reported price changes for our standard list of construction materials. These are commodities where prices directly impact the cost of constructing an apartment building. The two right hand columns of the table below provide the percent change in the price of the commodity from a year earlier (12 month percent change) and the percent change in price from April, 2018 (1 month percent change).
While construction material prices remain volatile when viewed on a month-to-month basis, the long-term trend is clear from the annual numbers. Prices have risen significantly in the past 12 months, especially for lumber and steel. These are categories expected to be most impacted by the tariffs the Trump administration has decided to impose on imports.
The chart highlights the relative price changes for softwood lumber and for OSB (oriented strand board) over the last 17 months. It normalizes the price of each of these construction materials to 100 in January, 2017 and shows how the price has changed since that time. While the prices of the two construction materials is up by a similar amount, the price of OSB has been much more volatile than that of softwood lumber.
The table shows the price changes for our collection of construction materials. While the BLS reports a modest rise in construction material prices overall, many of the items in our collection have experienced significant price increases over the last 12 months.
| Commodity |
12 Mo PC Change |
1 Mo PC Change |
| Softwood lumber |
15.4 |
6.4 |
| Hardwood lumber |
9.1 |
1.5 |
| General millworks |
1.9 |
0.1 |
| Soft plywood products |
25.5 |
-1.7 |
| Waferboard and oriented strandboard (OSB) |
12.5 |
4.7 |
| Hot rolled steel bars, plates and structural shapes |
15.3 |
4.5 |
| Copper wire and cable |
7.8 |
0.6 |
| Power wire and cable |
18.3 |
5.2 |
| Builder’s hardware |
1.1 |
-0.6 |
| Plumbing fixtures and fittings |
3.2 |
-0.1 |
| Enameled iron and metal sanitary ware |
1.7 |
0.1 |
| Furnaces and heaters |
3.6 |
1.1 |
| Sheet metal AC ducts and stove pipe |
0.7 |
0.0 |
| Electrical Lighting fixtures |
2.7 |
-0.1 |
| Nails |
8.4 |
1.4 |
| Major appliances |
2.7 |
0.0 |
| Flat glass |
7.8 |
-0.8 |
| Ready mix concrete |
6.5 |
-0.7 |
| Asphalt roofing and siding |
9.7 |
1.7 |
| Gypsum products |
4.9 |
-3.0 |
| Mineral wool insulation |
2 |
0.1 |
