The prices of goods used in residential construction ex-energy climbed 3.6% in January (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics.
The index was led higher by a 25.4% jump in softwood lumber prices, and 9% price increases for indoor and outdoor paint. Building materials prices increased 20.3% year over year and have risen 28.7% since January 2020. Over the past four months, the index has climbed 8.4%.
The price index of services inputs to residential construction increased 2.9% in January, following a 1.3% increase in December 2021. The index declined 13.5% between June and November last year, but has increased 4.1% in the two months since. The index is 8.9% higher than it was a year prior and 24.1% higher than the January 2020 reading.
Softwood Lumber: The PPI for softwood lumber (seasonally adjusted) increased 25.4% in January following 21.3% increase the month prior. Since reaching its most recent trough in September 2021, prices have increased 73.9%. According to Random Lengths data, the “mill price” of framing lumber has more than tripled since late August.
Paint: The PPIs for both exterior and interior architectural coatings (i.e., paint) increased 9% in January. Year over year, the prices of exterior and interior paint have climbed 30.3% and 21.2%, respectively. Prior to 2021, the record 12-month price increase for exterior paint was 8.5% and 10.1% for interior paint — each of which was set in March 2019.
Steel Products: Steel mill products prices declined 1.9% in January — the first decrease in nearly a year and a half. Monthly increases in the PPI for steel mill products slowed in each of the five months preceding January 2022. Prices, however, still have more than doubled over the past 12 months.
Ready-Mix Concrete: The PPI for ready-mix concrete (RMC) gained 1.4% in January after increasing 0.6% in December. The index for RMC has been relatively volatile since mid-2020 and has climbed 9.1%, year over year (YoY). Prior to January 2021, year-over-year price increases had not exceeded 8% since December 2006.
Gypsum Products: In January, the PPI for gypsum products climbed for the 11th consecutive month. Gypsum prices have risen 31.4% since August 2020, with only one decrease. Gypsum products prices have gained 23% year over year — the largest increase since data became available in 2012 and more than quadruple the 10-year average.
Other Building Materials: The chart below shows the changes in other price indices relevant to the residential construction industry since January 2020.
David Logan, NAHB director of tax and trade policy analysis, provides more in this Eye on Housing post.