Building materials prices climb at record rate
Washington, DC – Construction materials prices are up 19.4% in the past 12 months and 13% so far, according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. Prices for goods used in residential construction (excluding energy) rose 0.2% in July, after rising 3% in June (non-seasonally adjusted). Construction material prices (i.e. housing inputs minus food and energy) have fallen only twice since December 2019.
The record increase so far contrasts sharply with the same period in 2020, when prices rose by 1.1%. The average change in building materials PPI between January and July was +1.2% from 2015 to 2019 (the most recent data available), less than one-tenth of the gains so far in 2021, according to the National Association of Home Builders (NAHB ).
Pricing data for key building materials
The softwood PPI (seasonally adjusted) fell 29.0% in July — the biggest monthly drop since tracking the series began in 1947. Before 2020, the largest monthly decline in the softwood PPI was -10.7% from April 1980. The sharp decline followed an unexpectedly mild 0.7% decline in June, when the spot price of wood suddenly started in mid-May to descend. The softwood PPI is down 29.5% from its peak, but remains 71.9% above its January 2020 level.
While the direction of the softwood index’s change in value is encouraging, the ongoing volatility is not, according to the NAHB. Price volatility, as measured monthly by the PPI or weekly by industry publications, remains at an all-time high over a 12-month period.
Gypsum product prices rose 2.5% in July and are up 15.8% so far. Over the past 12 months, the index is up 21.7% — the largest 12-month increase since July 2006, according to the NAHB.
Ready-mix concrete prices remained unchanged (seasonally adjusted) in July after rising 1.1% in June, according to the NAHB.