Building Materials Prices Post a 0.3% Increase in February; Rise 2.9% Year-Over-Year

A closer look at January’s US Bureau of Labor Statistics (BLS) Producer Price Index (PPI), released on Tuesday (3-14-23), with a focus on the cost of construction materials and additional analysis provided by the National Association of Home Builders (NAHB), reveals that for the second consecutive month the PPI for inputs to residential construction less energy increased, rising 0.3%, not seasonally adjusted, in February. This follows a revised 1.1% increase in January.

Price growth of good inputs to residential construction, including energy, gained 0.4% month-over-month and prices have increased 2.9% year-over-year.

The product-specific breakdown is as follows:

• Ready-mix concrete (RMC) prices continued to increase at a historic pace. The RMC price index increased 0.8% in February, after climbing a revised 0.7% in January. Since January 2021, RMC prices have increased in all but two months.
• Gypsum building materials climbed 0.5% in February, after declining very slightly in January. Gypsum products prices are 12.5% higher than a year ago. However, prices began to stabilize in August 2022, and in past six months prices have only increased 0.7%.
• Softwood lumber, seasonally adjusted, fell 0.8% in February—the seventh consecutive monthly decline. Since topping out in March 2022, the index has fallen by 47.1% but remains approximately 20% above the January 2020 level.
• Steel mill products pricing increased 2.6% in February, more than offsetting the 2.4% decline reported in January. February’s increase is the first since May 2022. Nonetheless, the price of steel mill products has declined 26.0% since May 2022 and is down 21.2% year-over-year.

The price index for service inputs to residential construction rose 0.2% in February, following a 0.7% increase in January. Year-over-year, prices have declined 7.7% but have increased in four out of the past five months.