Prices of building materials rise
The Bureau of Labor Statistics (BLS) released its Producer Price Index report for November 2021. It showed prices for building components and materials rose 1.6% during the month, corrected seasonal variations. The index was 21.0% above its level a year earlier.
Aggregate prices of products processed for intermediate demand rose 1.5% during the month. The index was 26.5% above its level a year ago.
For reference, the changes in these indices compare to a 6.8% increase in the All-items Consumer Price Index (CPI-U) for the 12 months ending in November. The CPI-U rose 0.8% for the month. The shelter portion of the CPI was up 3.8% from a year ago.
Yield Pro has compiled the price changes reported by the BLS for our standard list of construction products. These are raw materials whose prices directly impact the construction cost of an apartment building. The two right columns of the table show the percentage change in product price from the previous year (12 MB PC change) and the percentage price change from October 2021 (1 MB PC change) . If no price data is available for a given product, the change is listed as N / A.
The pre-COVID column lists the evolution of current commodity prices relative to average prices from December 2019 to February 2020, before the pandemic affected the economy. This may give a more accurate idea of the magnitude of recent price increases as the 12MB PC Change column for commodities, such as lumber, whose prices were already rising sharply last summer.
|Merchandise||PC change 12 MB||1 MB of PC change||Pre-COVID change|
|Soft plywood products||2.0||4.5||67.7|
|Hot rolled steel bars, plates and sections||60.6||2.7||60.7|
|Copper wire and cable||28.1||1.0||35.4|
|Power wire and cable||37.7||3.2||48.0|
|Plumbing fixtures and fittings||4.0||0.5||5.4|
|Enamelled iron and metal sanitary ware||0.1||0.0||3.5|
|Ovens and radiators||12.4||0.5||12.8|
|Sheet metal products||33.9||2.9||33.4|
|Electric lighting fixtures||14.1||0.3||10.4|
|Asphalt roofing and cladding||17.7||3.2||21.2|
|Mineral wool insulation||19.6||-0.5||21.9|
The first graph below shows the history of the wood product price index over the past 25 months. Note that the prices used by the BLS to compile the indices are collected on the Tuesday of the week containing the 13e day of the month. In November 2021, that would have been November 9.
In November, the price of softwood lumber saw the largest monthly percentage increase for the commodities we track, rising 6%. However, the price of softwood lumber remains well below the highs reached last summer. Recently, the market price of lumber rose again, closing at over $ 1,110 on December 14th. Lumber prices recently hit a low of $ 536 in mid-November and were trading at around $ 400 in January 2020, before the pandemic.
Timber prices in the futures markets have increased in line with the increase in the spot price. The July 2022 contract, which was trading at around $ 700 in mid-November, was at $ 965 in mid-December. The September 2022 contract was for $ 905.
The price of soft plywood products has now seen the largest percentage increase from its pre-pandemic commodity level that we follow, rising almost 68 percent. It was up significantly in November, increasing 4.5% month over month.
Prices for hardwood lumber and general millwork have not seen the steep rises and falls in softwood lumber and plywood, but have recently risen steadily. Hardwood has now experienced a higher percentage price increase from its pre-pandemic level than softwood.
The following chart, below, shows the recent history of several other building material prices. Price increases for hot-rolled steel products are competing with those for plywood for the largest percentage increase from their levels immediately before the pandemic. The prices of the other metal-based raw materials that we track, such as sheet metal products, nails, electrical wires and copper wire, have also all increased by more than 30% from their pre-market levels. pandemic.
MarketWatch reports that the NYSE American Steel Index has been trading in a fairly narrow range of $ 1,500 to $ 1,600 since mid-September. It closed on December 14 at $ 1,547. If this stability can be maintained, one of the driving forces behind the rise in the prices of steel-heavy commodities will be removed. Steel futures indicate lower prices could arrive next year. The April 2022 contract is now priced at $ 1,213, down from $ 1,305 last month. The July 2022 contract is now at $ 1,067.
The price of copper is down from its recent high of $ 4.73 in mid-October and has traded between $ 4.25 and $ 4.47 in the past 6 weeks.
Aluminum prices are also down from the recent high of $ 3,168 it hit in mid-October. It recently traded around $ 2,650. While that number is down from the recent high, it is up sharply from the $ 1,800 it was trading for in early 2020.
Prices for asphalt roofing and siding and gypsum products have each increased by more than 20% from their pre-pandemic levels. This is a testament to the magnitude of the price increases of other commodities in the graph that the price increases of alone 20 percent are hardly worth discussing.
The price changes for many of the more finished products in our sample are shown in the final table below. Electric light fixtures, furnaces and heaters have increased steadily in recent times. Price increases for plumbing fixtures and fixtures and enameled iron and metal sanitary ware were among the weakest in building material prices that we track.
The full BLS report is available here.