Nonresidential building materials prices drop 0.6%

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 commodities Cement 0.1 0.2 -0.4 Construction sand, gravel, crushed stone 0.0 2.3 6.1 Softwood plywood -0.8 -4.0 -9.8 Softwood lumber -3.5 -7.4 -11.1 Manufactured materials Gypsum products 0.0 -0.1 5.7 Diesel fuel -8.9 -22.7 -62.7 Paint 0.0 0.0 12.2 Plastic construction products 0.1 0.2 3.5 Vitreous plumbing fixtures 0.0 0.1 1.9 Ceramic tile 1.9 0.9 1.6 Flat glass -0.8 -2.3 2.4 Hot-rolled bars, plates, structural shapes -6.4 -12.0 -15.1 Extruded aluminum rod, bar, shapes -2.3 -12.5 -23.9 Architectural metalwork -1.6 -5.6 13.9 Metal plumbing fixtures 0.3 0.1 2.6 Builders' hardware -0.1 -2.9 8.2 Sheet metal products -1.8 -3.2 2.9 Nonferrous pipe and tube -1.0 -1.4 -41.3 Building brick -1.1 -0.8 -1.0 Ready-mix concrete -0.7 1.4 4.8 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 Summary 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