The price of softwood lumber rose by 2.3% in December, while prices paid for ready-mix concrete, gypsum products, and OSB all fell, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. Ready-mix concrete, gypsum products and OSB prices fell by 0.1%, 0.2%, and 1.3%, respectively. The 2.3% increase in the softwood lumber price index is the largest monthly increase since April 2016.
Over the course of 2016, softwood lumber prices rose nearly 8.7% while prices paid for OSB spiked by 13.8%. In November, the cost of ready-mix concrete and gypsum products rose 3.5% and 5.0%, respectively, on a year-over-year basis.
In contrast to the price of softwood lumber–which has been relatively stable over the last two years–OSB prices have risen almost 30% during the same period. OSB prices leveled off in August 2016, but remain near their two-year high.
The economy-wide PPI increased 0.3% in December, 80% of which was driven by a 0.7% rise in prices paid for goods. Prices for final demand services rose only 0.1%. A 0.3% increase in the final demand prices for core goods (i.e. goods excluding food and energy) continued a positive trend that started with a 0.2% increase in November. Prices for core goods less trade services climbed 0.1% and rose 1.7% in 2016, far outpacing the 0.3% rise seen in 2015.
Sixty percent of the rise in prices for goods—the fourth straight increase—was due to the increase in prices of final demand energy. Gasoline prices alone (+7.8%) accounted for nearly half of the increase. In contrast, prices of fruit and residential electric power led declines among goods. The increase in prices for final demand services was led by securities brokerage, investment advice, and related services, which advanced 4.4%.
© 2014 NATIONAL ASSOCIATION OF HOME BUILDERS