US Building Materials Costs in Residential Construction Continue to Trend Higher in February

A closer look at the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) report released on Thursday, with a focus on residential construction materials costs and further analysis provided by the National Association of Home Builders (NAHB), reveals that the prices of goods used in residential construction, less energy, increased for the fourth consecutive month in February.

According to the NAHB analysis, the non-seasonally adjusted PPI index for residential construction materials increased 0.49% month-over-month in February, following a 1.27% increase in January. For comparison, the average monthly change in 2023 was 0.15%.

In both 2022 and 2023, January featured the largest monthly increases for both years: 4.05% and 1.07%, respectively. Over the year, the index was up 2.18%.

The PPI breakdown for residential construction materials in February is a follows:

• Seasonally adjusted, softwood lumber fell for the seventh consecutive month, declining 2.98%. Year-over-year, softwood lumber prices were 10.35% lower. The NAHB believes that lumber prices will likely start to creep higher as single-family home construction enters the spring building season.
• Gypsum building materials, not seasonally adjusted, increased 2.95%, following ten consecutive months of declines. Year-over-year, the PPI for gypsum was 0.18% lower.
• Ready-mix concrete (RMC), seasonally adjusted, increased 0.25%, following a 1.76% increase in January. Year-over-year, RMC prices were 7.42% higher.
• Steel mill product prices, not seasonally adjusted, climbed higher for the third consecutive month, posting a 2.86% increase. Year-over-year, steel mill product prices were 5.00% higher.