US Building Materials Costs in Residential Construction Creep Higher in November

A closer look at the Bureau of Labor Statistics November Producer Price Index (PPI) report, with further analysis provided by the National Association of Home Builders (NAHB), reveals that the prices of goods used in residential construction, less energy, increased 0.2% in November, following a 0.4% decline in October, not seasonally adjusted (NSA).

Year-over-year, the index increased 0.8%, marking the smallest YTD gain since it declined 0.2% over the first eleven months of 2019.

Since February 2020, prices for goods used in residential construction, less energy, have increased 36%.

The product breakdown of the PPI for November is as follows:

• Softwood lumber price declines increased in November, as the index dropped 5.8%, seasonally adjusted (SA), more than double the October decrease. Year-over-year, the index has declined 19.7% (NSA) and is lower than it has been at any point since March 2020.
• The PPI for gypsum building materials was unchanged in November after falling modestly in October (NSA). Gypsum building materials prices last posted an increase in March. Year-over-year, gypsum prices were 1.9% lower. The NAHB notes that the 12-month price growth for gypsum building materials slowed significantly over the first half of 2023 and turned negative in August.
• Ready-mix concrete (RMC) prices rose 0.1% in November (SA), as monthly price growth slowed for the second consecutive month. Year-over-year, price growth also decelerated for the second consecutive month, and prices have declined 9.4% since reaching their 2023 high of 13.3% in May (NSA).
• Steel mill product pricing (i.e., the raw materials used to make intermediate and finished steel goods) declined 1.5% in November (NSA). Steel mill products prices have declined each of the past 6 months by a total of 13.9%, reaching the lowest level since March 2021.

The PPI for service inputs to residential construction, excluding labor, declined 0.1% in November (NSA), after increasing a revised 0.6% in October. The index has increased 2.9% year-to-date and 0.5% over the past year.

The PPI for trucking freight declined 0.6% (NSA), while rail transportation rose 0.4% (NSA). The PPI for deep sea (i.e., ocean) transportation of freight increased 0.4% (NSA) in November. The price of rail transportation of freight has edged down 0.1% (NSA), year-to-date, while prices for truck and deep-sea transportation of freight have decreased 5.3% and 4.1%, respectively, the NAHB said.