OSB & Other Building Material Prices Fell in October

Prices received for four key building materials (prior to sales to consumers)—softwood lumber, OSB, gypsum products, and ready-mix concrete—all fell in October according to the latest Producer Price Index release from the Bureau of Labor Statistics.

OSB prices declined 0.5% in October, ending a 7-month trend that had made the commodity the most expensive it had been in over three years. The small percentage decrease, while welcome, is paltry compared to the cumulative 25% price increase OSB had experienced since February.  Prices received for ready-mix concrete, gypsum products, and softwood lumber declined by 0.1%, 0.5%, and 1.2%, respectively.

After rising 0.3% in September, the economy-wide PPI was unchanged in October. The flat reading was a result a 0.4% increase in the index for final demand goods being offset by a 0.3% decline in prices for final demand services. A 0.1% decline in the final demand prices for core goods (i.e. goods excluding food and energy) partly pared September’s 0.3% increase, and prices for core goods less trade services rose 1.6% over the 12 months ended in September, representing the largest 12-month increase since September 2014.

Most of the rise in prices for goods—the second straight increase—was due to a 2.5% increase in energy prices. For the second consecutive month, energy prices were buoyed by a significant jump in gasoline prices.  Prices increased 9.7% in October, nearly twice the September increase. The decline in prices for final demand services was led by a 0.3% decrease in prices of services less trade, transportation, and warehousing, more than offsetting the 0.2% September gain in the same category.