The rise in prices of building materials resumes in October
The Bureau of Labor Statistics (BLS) released its Producer Price Index report for October 2021. It showed prices for building materials rose 1.2% during the month, adjusted for changes. seasonal. The building components and materials index was 18.4% above its level of the previous year.
Aggregate prices of products processed for intermediate demand rose 1.7% during the month. The index was 25.4% above its level a year earlier.
For reference, the changes in these indices compare to a 6.2% increase in the All-items Consumer Price Index (CPI-U) for the 12 months ending in October. The CPI-U rose 0.9% for the month.
Yield Pro (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 September 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 in the first three months of 2020, before the pandemic hits the economy. This may give a more accurate idea of ââthe magnitude of recent price increases as the 12MB PC Change column for raw materials, 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||-18.5||-8.7||41.4|
|Hot rolled steel bars, plates and sections||60.0||1.2||54.1|
|Copper wire and cable||26.3||-1.1||33.9|
|Power wire and cable||37.1||0.0||43.6|
|Plumbing fixtures and fittings||3.5||-0.5||4.3|
|Enamelled iron and metal sanitary ware||1.1||0.0||3.9|
|Ovens and radiators||11.9||4.0||13.0|
|Sheet metal products||32.0||1.1||31.5|
|Electric lighting fixtures||11.0||2.8||10.0|
|Asphalt roofing and cladding||17.7||0.3||17.0|
|Mineral wool insulation||21.6||-1.7||20.0|
The first graph below shows the history of the wood product price index over the past 25 months. Note that the prices of building materials used by the BLS to establish the indices are collected on Tuesday of the week containing the 13e day of the month. In October 2021, that would have been October 12.
Softwood lumber prices are believed to have declined year over year in October. However, lumber prices had risen sharply in the months leading up to October 2020, so current prices may be down year over year but still high. Compared to pre-COVID prices, softwood lumber prices increased significantly in October 2021. More worryingly, they were up from September’s level after falling for several months.
Looking at the lumber price history, prices had climbed to over $ 700 around the time the BLS took its October reading. Since then, prices have dropped slightly and are now trading at just under $ 600, so there is hope that the October wood price hike will reverse in November.
Timber prices in the futures markets indicate that prices are expected to increase in the future. While the January 2022 contract was trading at $ 651 in early November, the March 2022 contract was at $ 675 and the July 2022 contract was trading at $ 705. A positive sign is that when we last looked at these prices, the March 2022 contract was trading close to $ 800.
Soft plywood prices were down both month-over-month and year-over-year according to the BLS. However, the table above shows that soft plywood prices have risen significantly from their pre-pandemic levels.
The following chart, below, shows the recent history of several other building material prices. While lumber and plywood prices grabbed the headlines, among the commodities we track hot-rolled steel prices are now up from their pre-COVID levels. The prices of nails, electrical wire and copper wire have also all increased by more than 30% from their pre-COVID levels.
MarketWatch reports that the NYSE American Steel Index has been relatively stable over the past month. It closed on October 12 at $ 1,581 and was trading near $ 1,560 in early November. Steel futures have been on the rise since last month, with the January 2022 contract priced at $ 1,565 recently and the April 2022 contract priced at $ 1,305.
The price of copper continued its recent volatility, trading as high as $ 4.72 per pound in late October and as high as $ 4.32 in early November. The good news is that the sharp price hike that took copper from $ 2.16 a pound in April 2020 to $ 4.74 in May 2021 appears to be over for now.
The price of aluminum may have finally peaked. It reached $ 3,168 on October 18 but fell to $ 2,605 on November 9. It was trading around $ 1,800 at the end of 2019.
The prices of the other commodities tracked in this chart have increased since the end of last year. Asphalt roofing and siding is the product that has increased in price the least from those listed. It has increased “only” by 17% from its pre-COVID level.
Price changes for many of the more finished products in our sample are shown in the final table below. The prices of electric lighting fixtures and the prices of heaters and heaters have risen sharply recently, while plumbing fixtures and fixtures and enameled iron and metal plumbing fixtures are two of the only 3 items in the market. our list of construction products whose prices have not increased double-digit percentages of their prices. pre-COVID levels.
The full BLS report is available here.