The producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices rose 0.1 percent month-over-month in September on a seasonally adjusted basis. The intermediate demand index of components and materials for construction was up 2.8 percent from its year-earlier level.
Overall prices for processed goods for intermediate demand were up 0.4 percent this month. The overall processed goods for intermediate demand index was 3.8 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 3.0 percent year-over-year rise in the seasonally adjusted all-items consumer price index (CPI-U) in September.
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 August (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.
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 September that would have been September 9. In the October report, the data collection date will be October 14.
The first chart, below, shows the price index history for wood products over the past 37 months.
The softwood lumber price index resumed its recent downward movement this month after a break in the trend last month. It was reported to fall 4.2 percent, aided by a 0.33 percent upward revision to last month’s index. The index is now down 12.2 percent since reaching a recent high in March.
After falling 8.6 percent between March and July, the soft plywood price index has risen for the last 2 months. However, the 2-month total rise was only 0.4 percent.
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.