NAHB reports that the prices of softwood lumber, OSB, and ready-mix concrete increased by 2.5%, 2.9%, and 0.5%, respectively, in August according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. In contrast, the price paid for gypsum fell 0.6%, its first monthly decline since May.
Softwood lumber prices rose for the second consecutive month the 3.0% decrease in June. The final demand price index for softwood has increased 22% since the start of 2016.
The OSB price index increased for the first time in three months. The index is up 9.2% since January 2017 and has risen 33% since January 2016.
The increase is consistent with buyers’ experiences, may in fact be understated because it includes waferboard, a reconstituted wood product in which the layers of flakes are not oriented.
The price of gypsum increased marginally, but could be one of the first materials to be affected by rebuilding efforts in the wake of Hurricanes Harvey and Irma. Remodeling will be the first building activity possible which will bring with it increased purchases of drywall.
Increasing by 0.5%, the change in prices paid for ready-mix concrete (seasonally adjusted) was slightly above its average since 2000. Prices increased nearly three-quarters of the months over that period by an average of 0.3%.
The economy-wide PPI advanced 0.2% in August after a 0.1% decrease in July. Three-quarters of the advance was driven by a 0.5% increase in prices paid for goods which more than made up for the 0.1% July decrease. A 9.5% rise in the price paid for gasoline accounted for three quarters of the change in prices of goods. Final demand prices for core goods (i.e. goods excluding food and energy) increased 0.2% and has increased nine of the past ten months. Prices for final demand core goods less trade services rose 0.2% following no change in July.
Final demand services prices edged up 0.1% after falling 0.2% in July. Over 70 percent of the increase can be traced to a 0.1-percent advance in the index for final demand services less trade, transportation, and warehousing. Conversely, margins for fuels and lubricants retailing fell 6.8%.