Despite Lumber Pricing Decline – Overall Building Materials Pricing Continue to Climb

According to the latest Bureau of Labor Statistics July Producer Price Index (PPI), with analysis provided by the National Association of Home Builders (NAHB), prices paid for goods used in residential construction, less energy, rose 0.2% in July, after rising 3.0% in June (not seasonally adjusted). Building material prices have declined just twice since December 2019 and have increased 19.4% over the past 12 months. The index for inputs to residential construction, including food and energy, increased more 0.6% and is up 22.3%, year-over year. Building materials prices have increased 13.0% year-to-date (YTD) in stark contrast with the same period in 2020 during which prices increased 1.1%. The PPI for softwood lumber (seasonally adjusted) decreased -29.0% in July—the largest monthly decline since tracking of the series began in 1947. Prior to 2020, the largest monthly drop in the softwood lumber PPI was a -10.7% reading from April 1980. The steep decrease came on the heels of an unexpectedly mild -0.7% decline in June as the cash price of lumber began falling precipitously in mid-May. The PPI for softwood lumber has fallen -29.5% from its peak but remains 71.9% above its January 2020 level. In July, the price of steel increased 10.8%, the price of gypsum increased 2.5%, while the price of ready-mix was unchanged from June.