Producer Price Index for New Residential Construction Inputs Climbs in June

A closer look at the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) for June, with additional analysis from the National Association of Home Builders (NAHB), shows that prices for inputs to new residential construction—excluding capital investment, labor, and imports—rose 0.7% in June. This follows a revised flat reading in May.

NAHB notes that tariffs on building materials are not directly reflected in the PPI, which measures prices for domestically produced goods and services only.

The index for inputs to the New Residential Construction Price Index increased 2.6% year-over-year. This index is composed of two main components: goods and services. Over the past year, the goods component rose 2.1%, while services rose 3.3%. By comparison, the total index for final demand—which covers all goods and services across the economy—increased 2.3% year-over-year, with prices for goods up 1.7% and services up 2.7%.

Input Goods

Goods account for roughly 60% of the inputs to residential construction. In June, prices for input goods to new residential construction rose 0.2% month-over-month.

The largest year-over-year price increase among input goods was for construction machinery and equipment parts, which jumped 24.2%. Other notable increases included metal molding and trim (+15.1%), fabricated steel plate (+13.6%), ornamental and architectural metalwork (+9.0%), and fabricated structural metal (+9.0%).

Input Services

Prices for service inputs to new residential construction rose 1.5% in June and 3.3% over the past year.

Trade services make up the largest share of service inputs (about 60%), followed by other services (29%) and transportation and warehousing (11%). Year-over-year, trade services prices increased 4.7%, other services rose 1.1%, and transportation and warehousing services advanced 2.1%.