Building Materials Costs Decline Month-Over-Month in April

A closer look at the Bureau of Labor Statistics December Producer Price Index (PPI) report released on Thursday (5-11-23), with further analysis provided by the National Association of Home Builders (NAHB), reveals that the prices of goods used in residential construction ex-energy declined 0.2% in April, not seasonally adjusted. Year-to-date, the index has gained 0.5%, which is the smallest April YTD increase since it increased 0.3% over the first four months of 2020.

The price index of goods inputs to residential construction, including energy, was unchanged over the month as a 1.7% increase in energy prices offset declines in other product categories. The index has declined 0.8% over the last 12 months but is 23.9% higher than the level suggested by the pre-2020 trend.

The full product breakdown is as follows:

• The PPI for softwood lumber (seasonally adjusted) increased 6.2% in April—the first increase since July 2022 and just the second increase since March 2022. Prices have increased 0.9% YTD but are 40.1% lower year-over-year.
• Steel mill product prices increased 3.1% in April after climbing 3.1% in February and March combined. Although this was the third consecutive monthly increase and the fourth over the past year, prices have fallen 14.8% over that period.
• The PPI for gypsum building materials decreased 1.1% in April after increasing in February and March. Gypsum building materials prices are 12.1% higher year-over-year but began to stabilize in September 2022. Prices for gypsum building materials have increased 0.6% in the seven months since.
• Ready-mix concrete (RMC) prices increased 0.4% in April after climbing 0.9% in March. The monthly increase was the smallest since prices fell 0.3% in March 2022. RMC prices have risen 1.8% year-to-date and are 12.4% higher year-over-year.
• The PPI for services inputs to residential construction increased 1.0% in April after climbing 0.4% in March. Prices have declined 13.0% over the past year but are 26.3% higher than the pre-pandemic levels at the start of 2020.
• The price of truck and ocean transportation of freight declined 1.7% and 0.4%, respectively, in April while the PPI for rail freight increased 0.4%. Trucking freight prices have declined 8.5% over the past year. The price of long-distance and local motor carrying have fallen 10.0% and 4.1%, respectively.