The Bureau of Labor Statistics (BLS) released its Producer Price Index report for May 2021. It showed that building material prices rose 3.9% in the month, adjusted for seasonality. The index was 17.3% above its level a year earlier.
The overall prices of products processed for intermediate demand increased by 2.8%. The index was 21.9% above its level a year ago.
For reference, the changes in these indices compare to a 5.0% increase in the All-items Consumer Price Index (CPI-U) for the 12 months ending in May. The CPI-U rose 0.6% for the month. Over the past 3 months, the CPI-U has increased at an annualized rate of 9.4%.
The safe haven portion of the CPI-U has increased 2.2 percent over the past 12 months.
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-hand 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 April 2021 (1 MB PC change) . If no price data is available for a given product, the change is listed as N / A.
|Merchandise||PC change 12 MB||1 MB of PC change|
|Soft plywood products||196.8||21.2|
|Hot rolled steel bars, plates and sections||29.0||0.7|
|Copper wire and cable||38.8||6.8|
|Power wire and cable||28.3||1.1|
|Plumbing fixtures and fittings||2.4||0.4|
|Enamelled iron and metal sanitary ware||2.9||-1.4|
|Ovens and radiators||4.8||0.3|
|Sheet metal products||12.2||0.4|
|Electric lighting fixtures||0.2||1.4|
|Asphalt roofing and cladding||12.6||3.5|
|Mineral wool insulation||9.0||3.4|
The first graph below shows the price history of wood products over the past 25 months. The persistent discrepancy in the price history of different wood products may indicate that the price increases are more due to limited capacity at mills than to a shortage of rough wood.
The wood market price is below the peak reached in early May. The contract price peaked at $ 1,686 on May 7 before falling below $ 1,000 on June 14. futures markets have followed the price down. The July 2021 contract is now less than $ 1,000 and the January 2022 contract is now at $ 740, barely higher than its March price.
The price of soft plywood products rose again by double digits this month, according to the BLS. For the fourth consecutive report, its monthly and annual price gains exceeded those of lumber.
The following chart, below, shows recent price history for several other building materials. Prices for electric wire and hot-rolled steel continued to rise sharply during the month. The price of copper wire has also increased, but less sharply than in recent months.
The copper price is also off the peak reached in early May. It closed on June 14 at $ 4.54 a pound, down from its recent high of $ 4.76, but up 27% from its end-January 2020 price. BLS data indicates that the price of copper wire has increased by 31% since then, so it would appear that the increase in the price of copper has been fully accounted for. Copper futures prices have remained in line with the spot price, with the January 2022 contract trading at $ 4.54 per pound.
The aluminum price also peaked in early May, trading at $ 2,540 per metric tonne. It is currently only slightly below that high, closing at $ 2,460 on June 14.
The price of steel has traded in a relatively narrow range since the peak reached on May 11. MarketWatch Reports that it closed on June 14 at $ 1,828, down 5% from its recent peak, but up 68% from its January 2020 level. steel base listed in our table, so there may be future price increases. Steel Futures continue to indicate that the price will only decline gradually over the next 12 months.
The prices of several other commodities tracked in this chart have increased recently. While these prices have not risen at the observed rates for the commodities discussed above, recent price increases have left them up at or near double-digit gains on the year.
Price changes for many of the more finished products in our sample are shown in the final table below. After rising sharply in April, reported price changes for these items were more moderate in May. The prices of two of those categories, major appliances and enameled iron and metal sanitary ware, are said to have actually declined during the month.
The full BLS report can be found here.