Cost of Building Materials is on the Rise

Filed in Economics by on April 14, 2017 3 Comments

Prices of softwood lumber, gypsum, ready-mix concrete and OSB all rose for the second consecutive month, according to the latest Producer Price Index (PPI)  released on April 13 by the Bureau of Labor Statistics.  Softwood lumber and OSB experienced the largest price increases.

The price of softwood lumber increased 2.3% in March after rising 4.8% in February. Softwood lumber prices have increased 7.2% over the first three months of 2017 and are up 12.9% since March 2016. These hikes have been largely, if not completely, due to the ongoing softwood lumber trade dispute between the U.S. and Canada.

The prices of many softwood products have jumped by more than 25% since the beginning of this year, and the Random Lengths Framing Lumber Composite Index (below) has risen 16% during the same period.

OSB prices posted a 2.7% increase in March and have increased nearly 25% since March 2016. The price index for OSB stands at its highest level since June 2013.

Meanwhile, gypsum and ready-mix concrete prices rose by a more modest 0.2% and 0.3%, respectively, on a seasonally adjusted basis in March. The moderate growth of gypsum prices is a welcome sign, as it hopefully signals a continuation of prices remaining in a “new normal” range, rather than rising sharply at the start of each year. Ready-mix concrete prices continued a steady, years-long upward trend, increasing 0.7% since the beginning of 2017.

NAHB economist David Logan provides further analysis in this Eye on Housing blog post.

 

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Comments (3)

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  1. Softwood lumber and OSB prices appear to be not proportionate to other price increases. Manufacturers of these products are covering all bases with competition from Canada unresolved

  2. Jim Long says:

    If the members of the HBA in the 4 coastal counties of NC & SC were to form a buying co-op, and purchase all our soft wood from brokers in Romania, I would estimate a 35% to 40% savings, after paying for storage and transportation.

    Between 2003 and 2006, our company saved an average of 65% on our softwood and stranded board purchased from Romania and other Eastern European countries. Of course, we were building military replacement housing on three bases, and supplying other general contractors performing the same types of contracts on other bases.

    When you show the suppliers in Canada that you are willing to set up the supply chain to purchase from another source, they will drop their prices. There is not a shortage of timber.

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