Building Materials Prices Decline for Second Consecutive Month in October

A closer look at the Bureau of Labor Statistics October 2022 Producer Price Index (PPI) report, which was released on Tuesday (11-15-22), with further analysis provided by the National Association of Home Builders (NAHB), reveals that the price of building materials declined 0.2% in October (not seasonally adjusted), following a 0.5% decline in September. The index has declined four of five months for the first time since 2015.

The PPI for goods inputs to residential construction, including energy, was led 0.2% higher by increased prices for diesel fuel (up 9.5%) and unleaded gasoline (up 5.7%).

The price index of services input to residential construction fell 0.7% in October, the seventh consecutive monthly decline. Prices have fallen a total of 14% since the index last increased in March 2022 and are just 1.4% higher year-over-year.

The full breakdown is as follows:

  • The PPI for softwood lumber (seasonally adjusted) fell 1.7% in October following a 3.1% decline in September and a 5.5% decline in August. Softwood lumber prices are 4.4% higher than they were a year ago but have fallen 41.3% since March. The index remains 3.0% above pre-pandemic levels.
  • The PPI for Steel mill products prices fell 6.6% in October and have declined 21.6% since May 2022. The index is currently at its lowest level since May 2021, after five straight monthly declines, each of which has been greater than the one before.
  • The PPI for ready-mix-concrete (RMC) increased 0.4% in October, but like steel mill products, the pace of increases in RMC have slowed each of the past three months. The RMC index has climbed 9.1% year-to-date, the largest October YTD increase in the series’ 34-year history.
  • The PPI for gypsum building materials was 0.2% lower in October—the second monthly decrease since September 2020. The gypsum index is 45.6% higher than its January 2020 reading.
  • The PPI for truck, rail, and ocean transportation of freight each declined in October. Truck freight dropped 1.4%—the fifth consecutive monthly decline—while the index for rail declined 0.7% and deep-sea transportation fell 1.8%. Year-to-date, ocean freight has increased 25.2%, while rail has moved 6.5% higher and truck freight has pushed 6.0% higher.

FEA compiles the Wood Markets News from various 3rd party sources to provide readers with the latest news impacting forest product markets. Opinions or views expressed in these articles do not necessarily represent those of FEA.