The prices of goods used in residential construction, excluding energy, climbed 1.6% in February (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. Building material prices increased 20.4%, year over year, and have risen 31.3% since January 2020.
Increases were held in check by metal, gypsum and concrete products. Here is a breakdown by material:
Steel Products: Steel mill products prices declined 9.9% in February, the second consecutive decrease after increases each of the prior 15 months. The last time the steel mill products PPI decreased more than 9 percent was December 2008. While January and February have been good months for the cost of derivative steel products, the PPI remains 74.4% greater than it was 12 months ago.
Gypsum Products: The PPI for gypsum products declined 1.9% in February, snapping an 11-month streak of increases during which the index climbed 31.4%. Gypsum products prices are up 20.7%, year over year.
Ready-Mix Concrete: The PPI for ready-mix concrete (RMC) gained 0.8% in February after increasing 1.1% in January. The index for RMC has been relatively volatile since mid-2020 and has climbed 8.2%, year over year. Prior to January 2021, year-over-year price increases had not exceeded 8% since December 2006.
Paint: After a 12-month period during which the prices of exterior and interior paint increased 30.3% and 21.2%, respectively, paint prices held relatively steady in February. The prices of exterior architectural coatings gained 0.1%, and interior architectural coatings PPI rose 0.3%.
Softwood Lumber: The PPI for softwood lumber (seasonally adjusted) increased 2.6% in February following a combined 28.9% increase over the two months prior. Since reaching its most recent trough in September 2021, prices have increased 79.5%. According to Random Lengths data, the “mill price” of framing lumber has more than tripled since late August.
David Logan, NAHB director of tax and trade policy analysis, provides more in this Eye on Housing post.