US Building Materials Costs in Residential Construction Inch Lower in October

A closer look at the Bureau of Labor Statistics June Producer Price Index (PPI) report released on Wednesday (11- 15- 23), with further analysis provided by the National Association of Home Builders (NAHB), reveals that the prices of good used in residential construction, less energy, fell 0.1% in October, not seasonally adjusted, following a 0.2% increase in September. Year-over-year, the index has increased 1.0%, marking the smallest gain year-to-date since it declined 0.1% over the first nine months of 2019.

For October, the PPI breakdown for construction materials is a follows:

  • Seasonally adjusted, the PPI for softwood lumber decreased 2.8% in October, following a 1.3% increase in September. Year-over-year, the index has declined 12.1% and is 52.3% lower than the record high reached in 2021.
  • The PPI for gypsum building materials moved slightly lower in October. Gypsum building materials prices last posted an increase in March and have declined 3.5% over the seven months since. Prices are now down 1.4% from October 2022.
  • Ready-mix concrete (RMC) prices rose 0.8% in October, following an upwardly revised 2.1% increase in September. Year-over-year, price increases have reaccelerated over the past two months after slowing to 10.2% in July.
  • Steel mill product pricing (i.e., the raw materials used to make intermediate and finished steel goods) declined 2.5% in October. Steel mill products prices have declined each of the past 5 months by a total of 12.5%, reaching the lowest level since March 2021. The NAHB notes the PPI for steel mill products is roughly one-third lower than the cycle peak reached in 2021 but remains more than 60% higher than the pre-pandemic level.

The PPI for service inputs to residential construction, excluding labor, increased 0.3% in October, after increasing 0.7% in September.

The PPI for trucking freight increased 1.1%, while rail transportation rose 1.4%. The PPI for ocean transportation of freight declined 11.4% in October, the second decline in as many months. Since August, the index for ocean transportation has decreased 17.4% but remains 30% higher than its historical average. The NAHB reports that year-to-date, the price of rail, truck, and deep-sea transportation of freight have declined 0.1%, 4.3%, and 15.0%, respectively.

FEA compiles the Wood Markets News from various 3rd party sources to provide readers with the latest news impacting forest product markets. Opinions or views expressed in these articles do not necessarily represent those of FEA.