Residential Building Materials Prices Climbed in March

A closer look into the Bureau of Labor Statistics (BLS) March Producer Price Index (PPI), with a focus on residential building materials and additional analysis provided by the National Association of Home Builders (NAHB), reveals that the price of building materials used in residential construction rose 0.3% in March (not seasonally adjusted). After declining in the last four months of 2022, the index has increased three months in a row—by a total of 1.6%—but has been relatively stable over the past year overall.

The prices of goods inputs to residential construction, including energy, gained 0.1% during the month of March, as a 6.4% decrease in energy prices offset increases in other product categories.

Here is a breakdown by product:

• The PPI for softwood lumber (seasonally adjusted) fell 4.0% in March, marking its eighth consecutive monthly decline. Since reaching its peak in March 2022, the index has fallen by 52.5% and is now just 11.5% above the January 2020 level.
• An acute shortage of distribution transformers remains ongoing: The PPI for power and distribution transformers increased 2.0% in March. Over the past two years, prices have rocketed 63.9% higher, with declines only recorded in just two months over the time period.
• The price of ready-mix concrete (RMC) continues to increase, gaining 0.7% in March after increasing 0.9% in January and 0.6% in February. Year-over-year, RMC prices have increased 13.1% and are up 24.2% since January 2021.
• The PPI for gypsum building materials declined 0.1% in March after increasing 0.4% in February. Gypsum building materials prices are 11.8% higher than a year ago, but they began to stabilize in September 2022. In the past 6 months, prices have been stable—up just 0.2%.
• Steel mill product prices increased 1.2% in March after posting a 2.5% gain in February. This was the second monthly price increase since May 2022. Nonetheless, the prices of steel mill products have dropped 25.2% since May 2022 and are down 15.1% year-over-year.

The PPI for service inputs to residential construction declined 0.8% in March, following a 0.6% decrease in February. Year-over-year, prices for services have dropped 15.2% but remain 23.2% higher than the pre-pandemic level at the start of 2020.