US Building Materials Price Growth Slows in March

A closer look at the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) report for March, with analysis provided by the National Association of Home Builders (NAHB), reveals that prices for inputs to new residential construction—excluding capital investment, labor, and imports—were up 0.6% in March. The increase for February was revised up to 0.7%.

The inputs to the New Residential Construction Price Index rose 1.3% year-over-year. This index is composed of two main components—goods and services—both of which increased 1.3% over the year. For comparison, the total final demand index, which reflects prices for all goods and services across the economy, increased 2.7% over the year. Within that, prices for goods increased 0.9%, while services rose 3.6%.

Input Goods

According to NAHB, the goods component carries greater weight in the New Residential Construction Price Index, accounting for approximately 60% of the total. In March, the price of goods inputs to residential construction rose 0.5%.

Energy input prices declined 3.9% in March and were down 14.9% compared to a year earlier—the eighth consecutive year-over-year decrease. In contrast, building material prices rose 0.8% over the month and were 2.7% higher than a year ago.

Input Services

According to NAHB, prices for service inputs to residential construction rose 1.1% in March but were down 0.1% compared to a year earlier. The service inputs index consists of three components: trade services (60% of the index), transportation and warehousing services (11%), and other services excluding those two categories (29%).

Over the past year, trade services prices increased 0.7%, other services rose 1.6%, and transportation and warehousing services saw the largest year-over-year gain, up 3.6%.