Building Material Prices Post Record Monthly Decline in April

Prices paid for goods used in residential construction decreased 4.1% in April (not seasonally adjusted) — the largest monthly decline on record — according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The year-to-date decline (-5.4%) in residential construction inputs prices is more than three times larger than the previous record (-1.3% in 2009).

Price changes for key materials

Gypsum: Prices paid for gypsum products decreased 1.3% in April (seasonally adjusted) after climbing 2.2% in March. Gypsum product prices have declined 4.4% year-to-date, the largest January-to-April decrease since seasonally adjusted data became available in 2012. Prices are down 9.5% from the most recent peak in March 2018.

Softwood lumber:Although the PPI report shows that softwood lumber prices declined 10.8% (seasonally adjusted) in April, the decrease is at odds with recent prices reported by Random Lengths. According to their weekly data, prices fell a more modest 2.7% over the month.

The discrepancy between the BLS and Random Lengths data stems from known differences in survey timing. NAHB economists anticipated this in last month’s PPI post, stating that the decline over the last 10 days of March “should be captured in next month’s PPI report.”

Ready-mix concrete: Prices paid for ready-mix concrete (RMC) decreased 0.4% in April (seasonally adjusted), following a 0.7% increase in March. The RMC index has increased 1.1% year-to-date, which is close to the historical average year-to-date price change in April.

NAHB economist David Logan provides further analysis in this Eye on Housing blog post.