Producer Price Index Shows Prices of Building Materials Edged Higher in July

According to the latest the Producer Price Index (PPI) report, with further analysis provided by the National Association of Home Builders (NAHB), the price of building materials increased 0.4% (not seasonally adjusted) in July. According to the NAHB analysis, prices have surged 35.7% since January of 2020, with 80% of those increases occurring since January of 2021.

The PPI for goods inputs to residential construction, which include energy, declined 1.2% as both unleaded gasoline (down 16.7%) and No.2 diesel fuel (down 16.7%) contributed to the downside of the PPI.

The PPI for services inputs to residential construction was driven 1.4% lower in July—the third consecutive monthly decline—by a 3.8% decrease in the building materials retail index. The services PPI is 3.0% higher than it was 12 months prior and 34.9% higher than its pre-pandemic level.

Specific products have had significant impacts on the July PPI, including the following:

• Ready-mix concreted gained 2.5% in July and has increased in 17 of the last 18 months.
• Softwood lumber (seasonally adjusted) gained 2.3% in July but have fallen 28.2% year-to-date.
• Gypsum products were flat in July but have increased 22.6% year-over-year, and for the first six months of 2022 they are up 7.6%.
• Steel prices declined 3.7% in July but still remain twice the level they were at in January 2021.
• The price of interior and exterior paint increased 0.5% and 1.0% in July. Since January of 2021, the prices interior paint has increased 33.8% and exterior paint has risen 50.7%.
• The price of truck transportation of freight decreased 0.3% in July, the second consecutive decline after two years of monthly increases. Over the past year, the indices for local and long-distance motor carrying prices are up 18.9% and 22.6%, respectively.