Residential Building Materials Prices Up

 
Courtesy of NAHB

Higher energy prices continued to play a key role in rising producer prices and building materials prices. According to the Bureau of Labor Statistics, for the fourth month in a row, higher energy prices were largely responsible the 0.8 percent seasonally adjusted increase in Producer Price Index for finished goods. This index has been rising since June, down a bit from the 0.9 percent increase in December. On a year-over-year basis, the index was up 3.6 percent.

The PPI for energy rose 1.8 percent, its fifth monthly increase over the last six months, down from December’s 2.8 percent rise. Excluding energy, the PPI for finished goods rose 0.5 percent from December, and was up 2.1 percent from January 2010.

The PPI for foods, which has been advancing by 0.5 percent or higher starting in September, rose 0.3 percent in January, down from 0.8 percent in December.  Excluding food and energy, the PPI rose 0.5 percent in January, and on a year-over-year basis was up a relatively modest 1.6 percent.

Prices for materials and components for construction rose 0.3 percent in December and were up 2.8 percent from a year earlier. However, residential building material prices have generally been rising faster than the materials and components for construction category. On a year-over-year basis, residential building material prices were up 4.3 percent in January.

As with the overall PPI, most of the residential construction materials cost increase was driven by energy prices—for example #2 diesel fuel was up 3.2 percent for the month and 17.7 percent from a year earlier. Meanwhile, ever volatile copper and copper products prices rose 2.3 percent, their seventh consecutive monthly increase, and were up 17.9 percent from a year earlier.

On the positive side, cement prices fell 0.3 percent and were down 4.8 percent from a year earlier. However, concrete products prices were up a bit for the month (0.1 percent) and were unchanged from a year earlier. At the same time, ready-mixed concrete prices unchanged for the month and were down 0.8 percent from January 2010. Meanwhile, gypsum prices, which had risen 0.8 percent in December, fell 3.3 percent in January, leaving them up on 0.5 percent from a year earlier.

Softwood lumber prices continued their recent march upwards, rising 3 percent in January after increasing 2.2 percent and 3.4 percent in November and December, respectively. The increases seem to be due to limited supplies as producers have reduced production and to suppliers re-building thin inventories.

With residential construction advancing slowly, commercial construction struggling, and the world economy growing modestly, there would appear to be little room for upward movement in most building materials prices. However, higher energy prices continue to put pressure on builders’ and suppliers’ costs.

– Courtesy of NAHB