U.S. Residential Building Material Costs in June Post Largest Yearly Increase Since February 2023

A closer look at the U.S. Bureau of Labor Statistics (BLS) Producer Price Index (PPI) for June, which was released on Thursday (7-11-24), with a focus on residential construction costs, with additional analysis provided by the National Association of Home Builders (NAHB) reveals that input to residential construction, goods less food and energy increased 0.19% in June.

The index for inputs to residential construction, goods less food and energy, represents building materials used in residential construction. Year-over-year (Jun. 23 – Jun. 24), the index was up 2.65%. Year-over-year growth has continued to climb this year, June’s increase was the highest since February of 2023. The NAHB points out that despite overall inflation declining, prices for inputs to residential construction have accelerated since the start of the year, leaving home builders to continue to deal with higher building material prices.

The NAHB reviews of June’s PPI reported the following changes to residential construction costs:

• The seasonally adjusted PPI for softwood lumber rose 3.41% in June, after falling 5.00% in May. Prices for softwood lumber are 7.41% lower than June 2023. Lumber prices remain lower than the peaks and valleys of 2020 through 2022 but remain higher than 2019 according to the index.
• The non-seasonally adjusted PPI for gypsum building materials was unchanged for the second consecutive month but was up 2.32% over the year.
• The seasonally adjusted PPI for ready-mix concrete increased 0.45% in June after rising a revised reading of 0.26% in May. Compared to other building materials, ready-mix concrete continues to feature year-over-year growth above five percent. This has been the trend since late 2021, as prices increased 6.51% in June 2024 compared to 2023.
• The non-seasonally adjusted PPI for steel mill products declined 1.18% in June after rising 0.54% in May. Year-over-year, steel mill product prices were lower than one year ago for the fourth straight month, down 15.01% from June of last year. This was the largest year-over-year decline since August of 2023, when the index was down 16.09%.
• The non-seasonally adjusted special commodity grouping PPI for copper fell 2.67% in June, the first monthly decline since February of this year. Over the year, the index was up 12.64%.