US Residential Construction Inputs Price Growth Moderates in 2024

A closer look at the Bureau of Labor Statistics (BLS) December Producer Price Index, with analysis provided by the National Association of Home Builders (NAHB), shows that prices for inputs to new residential construction—excluding capital investment, labor, and imports—remained unchanged.

The PPI grew 0.8% over 2024, the lowest yearly increase in the index since its inception in 2014.

The inputs to the new residential construction price index consists of two components: goods and services. In 2024, the goods component increased 1.7%, while services decreased 0.4%. For comparison, the total final demand index rose 3.3% over the year, with final demand for goods up 1.8% and final demand for services up 4.0%.

Input Goods

The price of goods used in residential construction grew 1.7% in 2024, slightly higher than the 1.0% growth in 2023. This growth can be attributed to the rise in the prices of building materials, which grew 2.2% last year. The price of energy inputs fell for the second straight year, down 5.3%.

NAHB notes that the five building materials with the greatest impact on the new residential construction price index showed the following annual changes:

• Softwood lumber (not edge worked) increase 14.7%
• Ready-mix concrete was up 5.1%
• Wood office furniture and store fixtures rose 4.3%
• General millwork increased 2.5%
• Paving mixtures and blocks were up 2.3%

Input Services

Among input services, the most significant component is trade services, which make up approximately 60%, followed by services excluding trade, transportation, and warehousing (29%) and transportation and warehousing services (11%).

Trade services decreased 1.8% in 2024 after growing 5.8% in 2023. Among individual services, credit deposit services saw the largest increase—rising 21.2%—while prices for metal, mineral, and ore wholesaling services experienced the largest decline, falling 19.2%.