Building Material Costs Increase Year-Over-Year by 5.4%

Further analysis, provided by the National Association of Home Builders (NAHB), of the December 2020, Producer Price Index (PPI), recently released by the Bureau of Labor Statistics, reveals that prices paid for goods used in residential construction in December, less energy costs, rose 0.7% and ended 2020, 5.4% above their December 2019 level. In 2020, building material prices (i.e., input to residential construction less food and energy) only declined twice over the course of the year. Prices paid for softwood lumber (seasonally adjusted) rose by double digits (+12.5%) following a -23.9% decline over the prior two months of October and November. The softwood lumber PPI remains nearly -15% lower than the record high set in September. However, data suggests that the index will increase more in January as rising prices in late-December and the first half of January are captured by the January BLS survey.