US Building Materials Costs Decrease 0.2% in October

A closer look at the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) for October, with a focus on building materials costs and additional analysis provided by the National Association of Home Builders, reveals that prices for inputs to new residential construction—excluding capital investment, labor, and imports—decreased 0.2% in October. Year-over-year, the index is up 0.3% after a decline of 0.1% in September.

NAHB notes that the inputs to the new residential construction price index can be broken into two components­—one for goods and another for services. The goods component increased 0.7% over the year, while services decreased 0.4%. For comparison, the total final demand index increased 2.4% over the year for October, with final demand with respect to goods up 0.2% and final demand for services up 3.5% over the year.

Input Goods

The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. The price of input goods to new residential construction was up 0.3% in October.

Prices for inputs to residential construction, goods less energy, were up 2.0% compared to a year ago. This year-over-year increase was larger than in September (a 1.4% increase) and the first percentage point increase since April. The growth rate in October 2023 was 0.8%. The index for inputs to residential construction for energy fell 13.1% year-over-year, the third straight yearly decline.

Input Services

The prices of inputs to residential construction for services fell 1.0% in October, NAHB said. The price index for service inputs to residential construction can be broken out into three separate components: trade services; transportation and warehousing services; and services excluding trade, transportation, and warehousing.

The most significant component is trade services (60%), followed by services less trade, transportation, and warehousing (29%) and transportation and warehousing services (11%). The largest component, trade services, was down 1.5% compared to last year, after increasing 0.6% in September. The decline in October was the first decline since August 2023, when the trade services index was down 1.2%.