Building Material Prices Increase at Fastest Pace in Three Years

Prices of building materials used in residential construction, excluding energy, were up 3.7% in April, the fastest pace in three years, according to the most recent Producer Price Index.

Building material prices have seen annualized inflation above 3% every month since July of last year.

Soaring energy prices caused a spike in the overall April PPI reading to 6% compared to last year. Including energy, the price index for inputs to new residential construction was up 5.9% from last year, with the price of goods used in new residential construction up 6.1% from last year, while the price of services was up 3.7% from last year.

Among input goods, the largest year-over-year increase was for No. 2 diesel fuel as prices were 74.4% higher than a year ago. Asphalt prices were up 18% after declining in March. Softwood lumber prices were up 1.1% in April after declining on a yearly basis for several months. Particleboard and fiberboard prices were down 12%, while softwood veneer/plywood prices were down 1.7%.

For more on the latest PPI release, see this post on NAHB’s economics blog Eye on Housing.