Building Materials Prices for Residential Construction Move Lower in September

A closer look into the Bureau of Labor Statistics September Producer Price Index (PPI), with a focus on building materials and additional analysis provided by the National Association of Home Builders (NAHB), reveals that the PPI for goods input to residential construction (including energy) declined for the third consecutive month in September by 0.1%. Prices have fallen 2.3% since June, the largest three month decline since April 2020.

The price index of services input to residential construction declined 0.8% in September, driven by lower building materials wholesalers’ margins and freight transportation prices. Services prices have declined each of the past six months by a combined 12.4% and are at the lowest level since 2021. In spite of the six-month decline, the PPI for services input to residential construction are 3.3% higher year-over-year.

Here is a breakdown by product:

• The PPI for gypsum building products inched lower 0.2% lower in September—just the second monthly decline in two years.
• The PPI for softwood lumber (seasonally adjusted) declined 2.9% in September, following a 5.2% drop in August. Softwood lumber prices are 14.5% higher year-over-year but have fallen 39.6% since March 2022.
• The PPI for steel mill products decreased 6.7% in September and have dropped 16.1% over the past four months.
• The PPI for transportation of freight decreased 0.4% in September, following a 1.9% decline in August. Over the past four months, prices have declined 3.1%.
• The PPI for ready-mix-concrete (RMC) increased by 1.4% in September—its six consecutive monthly increase—and year-over-year it has increased 11.6%.