The construction materials price index for nonresidential buildings fell 0.6% in March extending the decline since the September peak to 12.8%. Materials prices are back to the January 2008 level before the 14% jump in prices from March through September. The materials price index is expected to decline slowly for a few more months and then rise modestly by the end of the year. The index will rise more quickly next year, perhaps up 4-5% from the 2009 average.
March's price drop was led by diesel fuel (-8.9%), structural steel (-6.4%), and lumber (-3.5%). Weekly price reports assure that diesel prices will be higher in April. Another decline in steel and steel product prices is assured by the 8.3% March decline in steel scrap prices in a still weakening world economy. Softwood lumber prices are 11% below a year ago and 35% below three years ago. Yet they are likely to drop marginally lower in the next few months before a pickup in residential construction begins as early as this summer.
Components used in housing, such as lumber, gypsum, and low-rise roofing, have the most risk of price increase over the next year as the housing market begins to recover later this year.
—Jim Haughey, BD+C Economist and Chief Economist for Reed Construction Data
|Percent change in:||1 month||3 months||12 months|
|Source: Producer Price Index. Bureau of Labor Statistics|
|Construction sand, gravel, crushed stone||0.0||2.3||6.1|
|Plastic construction products||0.1||0.2||3.5|
|Vitreous plumbing fixtures||0.0||0.1||1.9|
|Hot-rolled bars, plates, structural shapes||-6.4||-12.0||-15.1|
|Extruded aluminum rod, bar, shapes||-2.3||-12.5||-23.9|
|Metal plumbing fixtures||0.3||0.1||2.6|
|Sheet metal products||-1.8||-3.2||2.9|
|Nonferrous pipe and tube||-1.0||-1.4||-41.3|
|Concrete block and brick||3.3||4.1||8.0|
|Millwork (window, door, cabinet)||0.3||1.1||2.0|
|Engineered wood products||0.8||-3.9||-0.9|
|Metal doors, sash, trim||1.6||0.4||5.4|
|Construction materials (commodity level)||0.3||-1.5||2.0|
|Inputs to construction industries||-0.6||-1.5||-2.1|
|Inputs to nonresidential construction||-0.6||-1.7||-3.7|