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U.S.: Construction materials prices flat in June
[Jul 13, 2023]

The producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices were unchanged month-over-month in June, seasonally adjusted. The index of components and materials for construction was also unchanged from its year-earlier level.

Overall prices for processed goods for intermediate demand fell by 0.6 percent in the month. The processed goods for intermediate demand index was 9.4 percent lower than its year-earlier level.

For reference, the changes in these indices compare with a 3.0 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in June. The seasonally adjusted June CPI-U was up 0.2 percent from May’s level. The shelter portion of the CPI-U was up 0.4 percent for the month and was 7.8 percent higher than its year-ago level.

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 two right hand columns of the table provide the percent change in the price of the commodity from a year earlier (12 Mo PC Change) and the percent change in price from May (1 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 may give a truer idea of the magnitude of the recent price increases for materials, such as lumber, whose prices were already rising sharply last year, than does the 12 Mo PC Change column.

The first chart, below, shows the price index history for wood products over the past 37 months. Note that 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 June that would have been June 13. In the July report, the data collection date will be July 11.

Wholesale lumber prices have been very stable for the last 6 months after two and one half years of extreme volatility. Prices for the four lumber categories that we track were lower in the latest report compared to last month. However, year over year comparisons for these construction materials prices are currently being made to the high prices of 12 months ago. These comparisons will be less favorable in the months ahead as they will be made to the falling prices of last summer.

Looking ahead, NASDAQ reported that the market price of lumber closed on June 13 at $528 and rose to $589 on July 11. The price rise between these dates was steady with only 3 days in the period with closing prices below that on June 13. However, lumber prices in the futures markets indicate that price rises may have run their course. The November 2023 contract closed on July 11 at $590, nearly the same as the current spot price.

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