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Building Materials Price Declines Led by Lumber and Plywood

Prices paid for goods used in residential construction decreased by 1.1% in June (not seasonally adjusted) according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics.  The decline broke a four-month trend of increases and was only the fifth month over the past two years in which prices fell.

Building Materials Price Declines Led by Lumber and Plywood

Over the past 12 months, building materials prices have decreased 1.6%, just the fifth June year-over-year decrease since 2000.  The decline is a sharp reversal of June 2017 to June 2018, during which prices increased 8.8%.

The PPI report shows that softwood lumber prices decreased (-1.7%, not seasonally adjusted) in June—the index’s third consecutive monthly decline. Prices remain at their lowest level since February 2017.  While weekly prices have been volatile since mid-May according to Random Lengths, the difference between the average prices of softwood lumber in May and June mirrored the PPI data (-1.8% v. -1.7%).

One of the special indexes published by BLS tracks lumber and plywood in one category.  Similar to softwood lumber, the lumber and plywood index fell 2.3%.  Prices paid for softwood lumber and lumber and plywood have decreased 23.1% and 17.6%, respectively, since June 2018.

The price index for gypsum products continued its downward trend in June, declining 1.9%.  In the last 10 months, gypsum prices have only increased twice.

Prices have declined by 6.2% and 10.8% since January 2019 and August 2018, respectively.

Ready-mix concrete prices increased 1.2% in June and remain relatively volatile.  Prices have risen by more than 1.0% in two of the past three months, something that has only happened in 18 of the previous 231 months.

This post provided by NAHB Eye on Housing. Martin Building & Development is a member of the HBA of Greater Springfield as well as the National Association of Home Builders.

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