Building material prices continue to rise

The Bureau of Labor Statistics (BLS) released its Producer Price Index report for December 2021. It showed building material prices rose 1.5% in the month, adjusted for seasonal. The index was 22.0% higher than its level a year earlier.

Overall prices for processed goods for intermediate demand fell 0.3% during the month, while prices for processed fuels and lubricants for intermediate demand fell 4.1%. The index was 24.4% higher than its level a year ago.

For reference, the variations in these indexes can be compared to a 7.0% increase in the all-items consumer price index (CPI-U) for the 12 months ending in December. CPI-U rose 0.5% for the month. The share of housing in the CPI increased by 4.1% compared to the level a year ago.

Yield Pro has compiled the price changes reported by the BLS for our standard list of building products. These are raw materials whose prices directly impact the construction cost of an apartment building. The two columns on the right of the table show the percentage change in price of the product compared to the previous year (12 MB PC Change) and the percentage change in price from November 2021 (1 MB PC Change). If no price data is available for a given product, the change is indicated as N/A.

The pre-COVID column lists the change in current commodity prices compared to the average price from December 2019 to February 2020, before the pandemic affected the economy. This may give a fairer idea of ​​the extent of recent price increases in commodities, such as lumber, whose prices have already risen sharply last summer, than does the 12MB PC Change column.

Merchandise 12 MB Change of PC 1 MB Change of PC Pre-covid change
Softwood lumber 14.1 23.6 71.6
Hardwoods 34.3 0.5 49.1
General carpentry 13.7 0.7 16.5
Soft plywood products 14.6 3.5 78.0
Hot rolled steel bars, sheets and sections 58.9 1.5 60.7
copper wire and cable 23.3 -1.4 36.8
Power wire and cable 55.1 -0.9 64.3
Builder’s Material 18.1 0.0 18.4
Plumbing fixtures and fittings 4.3 0.4 5.7
Sanitary ware in enameled iron and metal 4.4 3.9 7.4
Furnaces and heaters 12.2 1.4 14.4
Sheet metal products 36.9 2.7 36.3
Electric lights 18.1 3.2 14.7
Nails 38.2 5.2 39.1
Major Appliances 8.5 2.6 11.6
flat glass 12.7 4.7 18.0
ready concrete 7.4 0.7 8.6
Roofing and asphalt coating 12.4 -4.7 15.4
Gypsum products 20.2 0.0 22.8
Mineral wool insulation 20.5 0.4 22.6

Previously, individual commodity price indexes published by the BLS were almost never revised after release. However, in recent months, revisions have been made to many component price indices, some of them important. These revisions will be discussed below.

The first chart below shows the history of the Wood Products Price Index over the past 25 months. Note that the prices used by the BLS to compile the indices are taken on the Tuesday of the week containing the 13and day of the month. In December 2021, it would have been December 14.

price of building materials price of wood

In December, the price of softwood lumber saw the largest monthly increase as a percentage of the products we track, rising 23.6%. However, the price of lumber has been very volatile and was at a low point in mid-November, so the magnitude of the monthly increase is accentuated by the relative weakness in the price of the previous month.

Recently, the market price of lumber has risen again, closing at $1,212 on January 12. This is an increase of approximately $100 since our last report. Wood prices on the futures markets rose in parallel with the increase in the spot price. The July 2022 contract was trading at $1,090 in mid-January, up $125 in the last 4 weeks. The September 2022 contract was at $1,025, up $120 over that time.

Again this month, the price of soft plywood products posted the largest percentage increase from its pre-pandemic level of any building material we track, up 78%. It was up in December, rising 3.5% month-over-month. In addition, the softwood lumber price index for November has been revised up by 2.5%, so the index for December is actually up 6.0% from the level preliminary reported last month.

Hardwood lumber and general millwork prices haven’t seen the big ups and downs of softwood lumber and plywood, but have recently been rising steadily.

The following chart below shows the recent history of several other building materials prices. Prices for hot-rolled steel products and electrical wire and cable saw some of the highest percentage increases from their levels immediately before the pandemic.

price of building materials

If the chart above shows copper wire and electrical wire prices falling in December, it’s only because the November price indices for these building materials were revised up this month. . The copper wire index was revised up by 2.5%, while the electrical cable index was revised up by 12.0%.

Prices for other metal-based commodities we track, such as sheet metal products and nails, have also all risen significantly from their pre-pandemic levels.

MarketWatch reports that the US steel index NYSE has risen since the end of last year. It closed on January 12 at $1,713, up from its price of $1,547 on December 14. Steel futures still indicate that lower prices could arrive next year. The April 2022 contract is now priced at $1,074, down from $1,213 last month. The July 2022 contract is now at $991.

The price of copper has soared over the past few days, closing at $4.58 on January 12. That’s down from its recent high of $4.73 in mid-October, but well above its recent low of $4.15 on December 12.

The price of aluminum is down from the recent high of $3,168 reached in mid-October, but it has also increased over the past 4 weeks. While trading around $2,650 at the time of our last report, it closed at $2,917 on January 12, up 10%.

The price of asphalt roofing and siding suffered the largest decline of the building materials we track in December, but is still up double digits for the year and since the start of the pandemic. The price of gypsum products remained unchanged during the month.

The price variations of several of the most finished products in our sample are illustrated in the final table below. Electric light fixtures, heaters and heaters have been steadily increasing lately. Enameled iron and metal plumbing fixtures are the only building material type in our charts whose price gains since July 2017 have been below the rate of inflation as measured by the CPI-U.

price of building materials

The full BLS report is available here.

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