Posted April 18, 2017

Building material costs keep rising

Softwood lumber prices climb 7.2% in the first three months of 2017.

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.

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