Lumber Prices Lead the Latest Surge in Building Material Costs

The cost of building materials continued on an upward trajectory last month, according to the Bureau of Labor Statistics’ Producer Price Index. Prices paid for goods used in residential construction rose by 1.8%, according to NAHB. The overall rising price for goods is led by increasingly expensive softwood lumber. Softwood lumber prices grew by 11.0% in July but have grown 29.3% since April when lumber prices decreased by 10.8%. Other materials, such as gypsum and ready-mix concrete, experienced price jumps, although minimally compared to lumber. Read more to see which building materials influenced July’s index.

The index has decreased 1.3% year-to-date (YTD), a larger decline than the prior record for a July YTD decrease (-0.9% in 2000). Prices paid for goods used in residential construction have only fallen five times between January and June since 2000.

The Bureau of Labor Statistics includes energy costs in the calculation of the index of goods inputs to residential construction.  As of the December 2019 detailed weighting tables, energy accounts for 13.9% of the cost of inputs used in residential construction.  The previous weight was 10.7%.  One can see that diesel fuel, for instance, appears to be influential in the overall monthly price changes given by the index.

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