Softwood Lumber, Gypsum Products Lead Price Increases Among Building Materials

The prices of softwood lumber, gypsum, ready-mix concrete, and OSB all increased in February, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics.  The increases were led by gypsum products, with softwood lumber a close second.

After decreasing in four of five months, the price of softwood lumber rose in February. The 4.8% increase was the biggest in four years and largely, if not completely, due to the ongoing softwood lumber trade dispute between the U.S. and Canada. Some softwood products rose as much as 30% during the three-week period from January 27th to February 17th. Random Lengths weekly price data (below) shows that prices of framing lumber have either held steady or declined slightly since February 24th.

Gypsum prices posted a 5.3% increase, the largest increase since January 2015. Prices rose by a total of 6.2% in the first two months of 2017, reversing a three-year trend. The cumulative January/February price increases—which became customary earlier this decade—have slowed in recent years. During this two-month period in 2013, 2014, 2015, and 2016, prices paid for gypsum products rose by 15.8%, 11.8%, 8.6%, and 3.5%, respectively (see below). NAHB will pay close attention to whether the 6.2% increase is an isolated phenomenon or the start of a 2017 trend.

OSB and ready-mix concrete prices climbed by 3.0% and 0.5%, respectively, in February. The increase in prices paid for OSB pushed the index to its highest level since 2013. As was noted in the February producer price index blog post, the modest increase in ready-mix concrete prices falls in line with a six-year trend that includes only four monthly price declines.

The economy-wide PPI increased 0.3% in February, half the percentage increase in January.  Over 80% of the increase was driven by a rise in prices paid for services. Prices for final demand goods moved up 0.3%.  A modest 0.1% increase in the final demand prices for core goods (i.e. goods excluding food and energy) continued the upward trend that began in November 2016.  Prices for core goods less trade services climbed 0.3%.

Nearly 70% of the rise in prices for goods—the sixth consecutive increase—was due to a 1.6% increase in prices paid for electric power.  Conversely, the index for gasoline fell 2.5%. The increase in prices for final demand services was broad-based, led by a 4.3% rise in prices paid for traveler accommodation services.  Like energy goods prices, the price of services relating to energy also declined, falling 10.0%.



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