The Bureau of Labor Statistics (BLS) released its Producer Price Index report for May 2022. It said prices for building materials rose 1.1% in the month, seasonally adjusted. The index was 18.2% higher than its level a year earlier.
Overall prices for processed goods for intermediate demand rose 2.3% during the month. This index was 21.6% higher than its level a year ago.
For reference, the changes in these indexes can be compared to an 8.6% increase in the overall index. consumer price index (CPI-U) for the 12 months ending May. CPI-U rose 1.0% for the month. Housing’s share of the CPI rose 5.5% from its level a year ago.
Yield Pro has compiled changes reported by the BLS for our standard building materials price list. It is the prices of materials that directly impact the cost of constructing an apartment building. The first two columns from the right of the table show the percentage change in price of the product from the previous year (12 MB PC Change) and the percentage change in price from April 2022 (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 evolution of current prices of building materials compared to the average price from December 2019 to February 2020, before the pandemic affected the economy. This may give a more accurate picture of the magnitude of recent price increases for materials, such as wood, whose prices have already risen sharply last year, than does the 12MB PC Change column.
|Commodity||12 MB Change of PC||1 MB Change of PC||Pre-covid change|
|Soft plywood products||-21.9||-6.7||135.8|
|Hot rolled steel bars, sheets and sections||37.2||3.5||79.1|
|copper wire and cable||7.5||-0.5||42.8|
|Power wire and cable||36.7||3.3||71.2|
|Plumbing fixtures and fittings||10.0||0.4||14.1|
|Sanitary ware in enameled iron and metal||17.4||0.1||21.1|
|Furnaces and heaters||17.5||0.4||21.4|
|Sheet metal products||29.2||1.6||44.4|
|Roofing and asphalt coating||19.0||2.0||32.1|
|Mineral wool insulation||18.2||-0.5||32.3|
The first chart below shows the history of the Wood Products Price Index over the past 37 months. Note that the prices used by the BLS to compile the indices are collected on Tuesday of the week containing the 13e day of the month. In May 2022, that would have been May 10.
In May, softwood lumber prices rebounded slightly after falling in April. However, the April price was revised down by 0.6%, which explains part of the reported increase. The decline in the price of lumber from the level of a year ago is largely explained by the fact that lumber prices were then exceptionally high. The comparison with the pre-pandemic price level gives a more realistic idea of the evolution of lumber prices over the past two years.
Markets Insider reports that the timber market price has been trending downward since the peak in early March. The price closed at $528 on June 13, down $479, or 48%, since our last report. The prices of wood in the futures markets have fallen over the past month, leaving them well below levels of a month ago. The September 2022 futures contract opened at $537 on June 14, down $233 since our last report. The November 2022 contract was $550.
In May, prices for soft plywood products were reported by the BLS to be down 6.7%. However, the April price has been revised down by 8.2% this month, by far the largest downward revision for any price we track. Without this revision, the reported price decline would have been 14.4%. Yet flexible plywood prices are up 136% from their level around January 2020, the largest increase of any building material price we track.
The following chart below shows the recent history of several other building materials prices. These are relatively simple raw materials whose prices are strongly influenced by those of the materials that compose them. Prices for hot rolled steel, nails and electrical wire have all increased significantly over the past year. Gypsum prices also rose this month, rising 6.6%. This is the highest rate of increase for the month for all building materials prices we track.
Prices for most of the metal-based building materials we track rose in May at a faster rate than the overall average for building materials prices. This trend of faster price growth started in mid-to-late 2020 and has continued since then, with some month-to-month variations.
MarketWatch Reports that since our last report, the NYSE US Steel Index rose to $1,900 and then fell, leaving its level slightly below what we last reported. It closed June 13 at $1,606, down $33 from its level a month ago. Steel Futures have also declined over the past month. The September 2022 contract traded on June 13 at around $948, down $122 since we last reported on it. The November 2022 contract is at $925.
The copper price has also had its ups and downs since our last report on this. It closed at $4.55 per pound on June 2, but is now trading around $4.22 per pound. This is essentially the same price as in our last report.
The aluminum price has also been on a downward trend since early March. It closed June 13 at $2,686, down $92 since our last report.
In last month’s report, we commented on the price of mineral wool insulation jumping 9.3% during the month. However, in this month’s PPI report, the mineral wool price index for April was adjusted down by 7.3%, so April’s price increase did not was as large as that announced for the first time.
The price variations of several of the most finished products in our sample are illustrated in the final table below. While all have seen double-digit percentage increases over the past 12 months, unlike many other building materials prices we track, increases for these products are all less than 20% year over year. ‘other.
The full BLS report can be found here.