The latest Producer Price Index released by the Bureau of Labor Statistics shows a 1.5% increase in the prices of goods used in residential construction ex-energy, The NAHB’s Eye on Housing reports. Prices for building materials rose 15.9% throughout 2021, driven by large price gains for softwood lumber, which have risen 44.5% since September.
Between 1947 and 2019, the monthly change in prices for softwood lumber averaged 0.3%, but since January 2020, the index has measured an average 12.0% price change. Ready-mix concrete also saw sizable gains in 2021, though monthly changes suggest a strong potential for price deceleration in 2022.
The PPI of most durable goods for a given month is largely based on prices paid for goods shipped, not ordered, in the survey month. This can result in lags relative to cash market prices, suggesting another sizable increase in the softwood lumber producer price index may be in the next PPI report.
Record-high volatility of softwood lumber prices continues to be as problematic as high prices. The monthly change in softwood lumber prices averaged 0.3% between 1947 and 2019. In contrast, the percent change of the index has averaged 12.0% since January 2020—the highest 24-month average since data first became available 1947 and nearly triple the previous record.
Related Stories
Building Materials
Building Materials Rise 19% Year-Over-Year
Prices for most in-demand building materials are still rising after consecutive monthly gains at the start of 2022
Manufacturers + Suppliers
Home Builders Are Feeling the Supply Chain Aftershock of the Russia-Ukraine Conflict
The war in Ukraine is cutting off essential commodities and leaving builders to contend with backed up supply chains
New-Construction Projects
Fewer Buyers Are Looking for New Construction as Prices for Building Materials Rise
Inflated prices for building materials are pushing new home construction out of reach for budget-conscious buyers