According to the latest Bureau of Labor Statistic (BLS) Producer Price Index (PPI), with analysis provided by the National Association of Home Builders (NAHB), the prices of goods used as inputs into residential construction including energy have risen 19.0%. Without energy, they are up 12%, year-to-date. Compare that to the index for final demand goods, which has climbed 7.2%, and that for final demand goods less food and energy is up 5.3% since January.
An even larger disparity exists between the year-to-date price changes of all final demand services — the PPI for which has increased 3.9% — and the subset of services used in residential construction (excluding labor), which has climbed 19.3%. Although the recent decline in lumber prices is helping bring costs down, the decline has been offset by large increases in the prices of a multitude of other products. Some building materials and inputs to building materials have seen especially acute increases over the last three months.
Of the goods analyzed by the NAHB for the report, nine experienced price increases exceeding 20% between April and July and they are: laminated veneer lumber, building paper and building board mill products, lawn fertilizer materials, plastic water pipe, fabricated structural metal, other engineered structural wood members, cooper pipe and tubing, steel mill products, and aluminum base scrap. Over the first seven months of 2021, the majority of these products’ prices have increased many times more than they did in 2020. The price change of steel mill products is the most glaring example, increasing 81.3% year-to-date following a 2020 increase of 11.1%.
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Building Materials Prices: Large Increases Year-To-Date