Construction materials prices increase at a faster rate in January.

Construction materials saw a 0.3 percent month-over-month price increase in January, as reported by the Bureau of Labor Statistics (BLS) Producer Price Index (PPI). The index for construction materials and components rose by 1.1 percent compared to the previous year. In the same period, processed goods for intermediate demand saw a 1.0 percent increase, driven by a 3.5 percent rise in processed fuels and lubricants. This index was also 1.0 percent higher than the previous year.

Comparing these increases with the Consumer Price Index (CPI-U), which rose by 0.5 percent month-over-month and 3.0 percent year-over-year, construction materials prices are clearly outpacing general inflation. Yield Pro analyzed the BLS data for a standard list of construction materials prices that directly impact apartment building costs. The data showed changes in prices from December and a year earlier, with comparisons to the pre-COVID period from January 2019 to February 2020.

Softwood lumber saw a 1.8 percent decrease in January, contrasting with a 9.5 percent rise over the previous year. This pattern resonates across various materials on the list, with hardwood lumber increasing by 1.0 percent month-over-month and 3.8 percent year-over-year. Similarly, hot rolled steel bars, plates, and structural shapes surged by 10.9 percent in January.

The price trend for copper wire and cable, power wire and cable, and other construction materials remained positive, reflecting the broader industry’s inflationary pressure. Despite price fluctuations, the long-term comparison to pre-COVID prices highlights the ongoing escalation in construction materials costs.

Data collection for these indexes occurs on the Tuesday of the week containing the 13th day of the month. Softwood lumber prices, which had risen steadily, experienced a slight decline in January but rebounded in February. Hot rolled steel bars prices surged 11.2 percent in just two months, signaling significant volatility in this category.

Copper prices were the only ones to rise in January, amid a broader landscape of fluctuations. The delicate balance between supply chain disruptions, demand surges, and macroeconomic factors continues to drive these price movements. Further transparency and understanding of these material costs are crucial for stakeholders in the construction industry to navigate this challenging environment successfully.