Ready-Mix Concrete, Gypsum Products Lead Building Materials Prices Higher in January


Prices paid for goods used in residential construction increased 0.5% in January (not seasonally adjusted) according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics.

Building materials prices have increased 2.0% over the last 12 months and by 3.3% since January 2018.  The average monthly increase since the start of 2018 has been 0.14%, with the largest monthly increase (+1.9%) occurring during the historic run-up in lumber prices in May 2018. The largest decline (-1.8%) occurred in December of the same year, at the tail end of the fall of lumber prices from their June 2018 peak.

Prices paid for gypsum products increased 2.8% in January (seasonally adjusted), the largest percentage increase since February 2018. Although the price increase was relatively steep, gypsum products remain less expensive than they were in January 2018.  This is mainly the result of an 8.4% price decline between August 2018 and February 2019 that brought prices to their lowest level since early 2017.  Prices have risen 7.1% over the last three years.

Prices paid for ready-mix concrete (RMC) advanced 0.6% in January (seasonally adjusted) after decreasing in three of the four preceding months.

RMC prices have been volatile over the last two years relative their post-Great Recession average.  Annualized monthly volatility from January 2018 to January 2020 has been more than two times what it was from July 2009 through December 2017.

The PPI report shows that softwood lumber prices declined 0.9% (seasonally adjusted) in January. In contrast, the monthly average of the Random Lengths Composite Index increased 2.5% from December 2019 to January 2020.  As the discrepancy is likely due to timing differences between the two surveys, the softwood lumber PPI will likely rebound next month as would be consistent with the reconciliation of prior differences.

In 2019, American buyers of Canadian lumber were adversely affected by the depreciation of the US dollar relative to the Canadian dollar in addition to the 20% tariff on Canadian lumber imports. Not only did the price of softwood lumber rise in 2019, but the US dollar also depreciated 4.6% against the Canadian dollar over the period.

Fortunately, although prices have increased in 2020 according to Random Lengths, so too has the strength of the dollar.  Relative to the Canadian dollar, the U.S. dollar has appreciated 1.9% since the beginning of 2020 and 1.6% since the last PPI blog post.

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7 replies

  1. Ready-mix concrete continues to rise in turn increasing the cost of housing with no end in sight. It is a main competitor of asphalt and when oil prices increase asphalt prices goes up driving the demand for concrete. So many variables! Remember when the Chinese were building the 3 Gorges dam? Cement powder could not be found because it was being shipped to China. Anyways good times!

  2. This is amazing! Thank you very much for giving me a detailed article. This will be a great help when I discuss with the local contractor here.

  3. I really appreciate you for publishing this blog here; it’s really a helpful and very useful for us. This is really appreciated that you have presented all data on the given topic. I love all the information shared. Great article!

  4. Looking back on that, yeah i can agree the prices did go up… and by a reasonable sum! Great work David!

  5. This is a great post. I like this topic. It helps me in many ways. Thanks for posting this again
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  6. I feel like the prices went up because of the pandemic.. people were doing a lot of projects at home because they couldn’t leave their home. Have the prices gone down or continued to rise since then?

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