Prices paid for goods used in residential construction increased 0.5% in January (not seasonally adjusted) according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics.
Building materials prices have increased 2.0% over the last 12 months and by 3.3% since January 2018. The average monthly increase since the start of 2018 has been 0.14%, with the largest monthly increase (+1.9%) occurring during the historic run-up in lumber prices in May 2018. The largest decline (-1.8%) occurred in December of the same year, at the tail end of the fall of lumber prices from their June 2018 peak.
Prices paid for gypsum products increased 2.8% in January (seasonally adjusted), the largest percentage increase since February 2018. Although the price increase was relatively steep, gypsum products remain less expensive than they were in January 2018. This is mainly the result of an 8.4% price decline between August 2018 and February 2019 that brought prices to their lowest level since early 2017. Prices have risen 7.1% over the last three years.
Prices paid for ready-mix concrete (RMC) advanced 0.6% in January (seasonally adjusted) after decreasing in three of the four preceding months.
The PPI report shows that softwood lumber prices declined 0.9% (seasonally adjusted) in January. In contrast, the monthly average of the Random Lengths Composite Index increased 2.5% from December 2019 to January 2020. As the discrepancy is likely due to timing differences between the two surveys, the softwood lumber PPI will likely rebound next month as would be consistent with the reconciliation of prior differences.
See more at NAHB’s Eye on Housing blog.