Construction material prices rise on higher lumber prices – UW GROUP

Construction material prices rise on higher lumber prices

The Bureau of Labor Statistics (BLS) released its producer price index report for July 2020. It showed that the BLS price index of materials and components for construction was up 0.5 percent from June, seasonally adjusted. It was 1.1 percent higher than its year-earlier level.

By contrast, overall prices for processed goods for intermediate demand rose by 1.5 percent. A 31 percent jump in the price of diesel fuel accounted for about half of the increase. Excluding food and energy, the price index for processed goods for intermediate demand was up by 0.5 percent for the month. The full index was 5.0 percent lower than its year-ago level.

For reference, the changes in these indices compare with a 1.0 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in July. The monthly increase in the index was 0.6 percent in July, matching last month’s rise.

Real average weekly earnings for all employees was down by 0.6 percent for the month of July but were still up by 4.3 percent over the last 12 months. The weekly earning statistics are being roiled by changes in the mix of job types in the economy due to COVID related shutdowns and re-openings.

Yield Pro (PRO) compiled the BLS reported price changes for our standard list of construction commodities. These are commodities whose prices 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 June 2020 (1 Mo PC Change). If no price data is available for a given commodity, the change is listed as N/A.

Softwood lumber prices rose strongly again in July. Soft plywood product prices also jumped this month. Reports indicate that the price increases are due to lumber mills being shut down due to COVID concerns and not ramping production back up quickly enough to accommodate the increased demand caused by the resumption in construction activity. Reports that prices for raw timber have not increased support this view. If true, then the price increases currently being experienced may prove to be only temporary.

lumber prices


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