Washington, D.C.—Building material prices have increased 19.4% over the past 12 months and 13% year to date, according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. Prices paid for goods used in residential construction (excluding energy) rose 0.2% in July after climbing 3% in June (not seasonally adjusted). Building materials (i.e., inputs to residential construction less food and energy) prices have declined just twice since December 2019.
The record year-to-date increase stands in stark contrast with the same period in 2020, during which prices increased 1.1%. The average change in the building materials PPI between January and July was +1.2% from 2015 through 2019 (the most recent data available), less than one-tenth the gain thus far in 2021, according to the National Association of Home Builders (NAHB).
Price data for key building materials
The PPI for softwood lumber (seasonally adjusted) decreased 29.0% in July—the largest monthly decline since tracking of the series began in 1947. Prior to 2020, the largest monthly drop in the softwood lumber PPI was a -10.7% reading from April 1980. The steep decrease came on the heels of an unexpectedly mild 0.7% decline in June as the cash price of lumber began falling precipitously in mid-May. The PPI for softwood lumber has fallen 29.5% from its peak but remains 71.9% above its January 2020 level.
Although the direction of the softwood lumber index value change is encouraging, the continued volatility is not, the NAHB said. Price volatility as measured monthly by the PPI or weekly by industry publications remains at an all-time high for a 12-month period.
Prices paid for gypsum products increased 2.5% in July and are up 15.8% year to date. Over the past 12 months, the index has climbed 21.7%—the largest 12-month increase since July 2006, according to the NAHB.
Ready-mix concrete prices were unchanged in July (seasonally adjusted) after increasing 1.1% in June, according to the NAHB.