Building Material Prices Climbing at Record Year-to-Date Pace

Material Costs
Published

Despite significant drops in framing lumber prices in recent months, overall building material prices have increased 19.4% during 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.

Steel mill products prices climbed 10.8% in July following a 6.2% increase in June. The pace of increases has accelerated each of the last two months, and prices have climbed 108.6% over the past 12 months and 87.6% in 2021 alone. The monthly change in the steel mill products PPI increased by more than 10% only three times (in 1947, 1948 and 2008) over the 80-year period ending in 2020. Monthly increases have already exceeded that mark four times in 2021.

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. 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.

Ready-mix concrete prices were unchanged in July (seasonally adjusted) after increasing 1.1% in June.

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

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Economics

May 23, 2025

Volatile Spring Selling Season Continues

Sales of newly built, single-family homes in April increased 10.9% to a 743,000 seasonally adjusted annual rate from a downwardly revised March number, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in April was up 3.3% compared to a year earlier.

Material Costs

May 22, 2025

NAHB Members Cite Impact of Tariff Uncertainty on Home Building

Tariff uncertainty from the Trump administration continues to impact home builders across the country, as builders prepare for potential price hikes and supply chain issues. NAHB members have been sharing the impact that these tariffs are having with media outlets across the United States.

View all

Latest Economic News

Economics

May 22, 2025

Existing Home Sales Fall in April

Despite the brief retreat in mortgage rates and increased supply, existing home sales dropped to 7-month low in April, according to the National Association of Realtors (NAR). This unexpected decline suggests buyers’ activity continues to be constrained by economic uncertainty and ongoing affordability challenges even with improved market conditions.

Economics

May 22, 2025

Income Growth Helps Mute Existing Affordability Constraints

Despite solid income gains and lower home prices, Americans still continue to face major housing affordability challenges, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI).

Economics

May 21, 2025

Gains for Multifamily Missing Middle over Last Year

The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties.