NAHB: Building material prices climb, but softwood lumber falls

softwood lumber building materials prices
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Building material prices have increased 19.4% over 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. The National Association of Home Builders reports that 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.

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.

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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.

See more at NAHB’s NAHBNow blog.

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