Reports Show an Increase in Steel Prices While Lumber and Concrete Prices Fall
Good news in the residential construction industry. Both lumber and concrete products have dipped in price. This has caused prices paid for goods used in residential construction ex-energy decreased 0.8% in September (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The price index of services input to residential construction also saw a dip in pricing in September. This was caused by smaller gross profit margins of building materials retailers.
Even with the decrease in pricing, building materials are still 13% higher than a year earlier and 11.3 higher than reported this January 2021. Service inputs also are up but did not increase as much. There was only a 9.5% increase in the first nine months of 2021 which dropped from the 11.9% increase in the first nine months of 2020.
The Producer Price Index (PPI) for softwood lumber shown seasonally adjusted went down 3.5% in September. This is calculated by taking a survey of the prices paid for goods shipped during the month. The industry leaders predict there will be an increase in softwood lumber prices due to the FLCP (Random Lengths Framing Lumber Composite Price) rising 36% since August 2021.
As for ready-mix concrete (RMC), the PPI went down slightly to 0.5% in September. This is the first decline seen since January 2021. Over the past 12 months, RMC has increased 3% and year-to-date 4.1% in September 2021. The largest decline was seen in the West at 2%, in the Northeast and South at 1% and increased 0.2 in the Midwest.
Gypsum products rose 1% in September making it the seventh consecutive monthly increase. The PPI year-to-date in 2021 increased 16.6% and 22.6% over the past 12 months in September. Gypsum products did see a decrease last year between January and September 2020 of 2.8%.
Steel products rose in pricing 5% in September which followed a 5.1% in August 2021. The monthly change in the steel mill products PPI increased by more than 10% only three times (in 1947, 1948, and 2008) over the 80-year period ending in 2020. Monthly increases have exceeded that mark four times in 2021.
Luckily the prices of services declined 2.7% in September which followed a decrease of 5.7% in August 2021. The monthly decline of 3.7% in trade services input pushed this decline.
If you are in the market for a new construction single-family home now is a good time to contact a local Realtor or local custom builder who can help you with your needs. Leave it to a professional as they are able to navigate this boisterous current housing market.