Nonresidential building materials prices drop 0.7% in February
The construction materials price index for nonresidential buildings fell 0.7% in February, extending the decline since the September peak to 12.3%, according to Jim Haughey, PhD, BD+C Economist and Chief Economist of Reed Construction Data.
Materials prices are back to the February 2008 level before the 14% jump in prices from March through September. The price index is expected to decline slowly for a few more months but be rising modestly again by the end of the year and rising more quickly next year, perhaps up 4-5% from the 2009 average.
February’s price drop was lead by steel products. Structural steel prices fell 2.9% with similar drops for steel pipe and builders' hardware, and a smaller decline for metal plumbing fixtures. Nonferrous price changes were mixed in February. Extruded aluminum prices fell 3.2%, but copper pipe and tube prices jumped 5.8% as copper ore and scrap prices both increased sharply. The countercyclical move in copper prices is supply-driven and likely to be short term.
Lumber and plywood prices were marginally lower. Cement and gypsum product prices declined 1.1% after very little price decline over the past year. The abrupt price drops for cement and gypsum reflect a marked slowed in building construction activity in the last few months as work was slowed or suspended on many projects already underway.
But the cement price decline is not reflected in concrete products prices which generally rose slightly because aggregate prices are rising, up 0.9% in February.
The only other significant price changes in February were an 11.3% cut in diesel fuel costs and an 8.0% drop in natural gas prices which will work its way into plastics products prices within a few months. Daily energy price monitoring suggests another 8% fall in diesel prices and a marginal drop in natural gas prices in March. Beyond March, diesel fuel prices are not expected to decline further but natural gas prices are likely to dip another 10% by mid-year which will result in small price declines for construction plastics and construction petrochemicals, such as adhesives and paint.
Price trends vary widely by region depending on the level and mix of construction work in each market. Price level and trend information for more than 300 markets is available from RSMeans at http://www.reedconstructiondata.com/construction-costs/us/
|Percent Change in …..||1 month||3 months||12 months|
|Construction Sand, Gravel & Crushed Stone||0.9||2.3||6.3|
|Plastic Construction Products||-0.1||-1.4||2.9|
|Vitreous Plumbing Fixtures||0.1||0.1||2.0|
|Hot rolled bars, plates & structural shapes||-2.9||-12.9||-7.0|
|Extruded Aluminum rod, bar and other shapes||-3.2||-15.3||-17.9|
|Metal Plumbing Fixtures||-0.6||-0.1||0.8|
|Sheet Metal Products||-1.2||-2.9||4.9|
|Nonferrous Pipe and Tube||5.8||-16.9||-35.5|
|Ready Mix Concrete||-0.2||2.0||5.9|
|Concrete Block & Brick||0.7||1.0||4.6|
|Millwork (window,door, cabinet)||0.6||1.0||2.1|
|Engineered Wood Products||-2.8||-4.4||-1.5|
|Construction Machinery Rental (incl. oilfield equip.)||0.2||0.1||-1.7|
|Trucks over 14,000 Ibs. GVW||1.4||2.4||5.4|
|Metal Doors, Sash and Trim||-0.7||-1.2||3.7|
|Construction Materials (commodity level)||-1.2||-4.4||2.6|
|Inputs to Construction Industries||-0.6||-3.4||0.5|
|Inputs to Nonresidential Construction||-0.7||-4.6||-0.4|
|Source: Producer Price Index. Bureau of Labor Statistics|