Prices for Softwood Lumber Drove Up January PPI

Prices for building materials used in residential construction ex-energy jumped 3.6% in January after steady gains throughout a pandemic-driven supply chain storm, NAHB’s Eye on Housing reports. The latest Producer Price Index (PPI) report from the Bureau of Labor Statistics was elevated by a 25.4% rise in softwood lumber prices, followed by a price increase of 9% for indoor and outdoor paint. 

Building materials prices are up 20.3% year-over-year and have climbed by 28.7% since January 2020. In just the past four months, the index has risen by 8.4%, revealing the quick pace of price volatility as a costly pandemic slowly loosens its grip on the building industry. 

The price index of services inputs to residential construction increased 2.9% in January following a 1.3% increase in December 2021. The index declined 13.5% between June and November last year but has increased 4.1% in the two months since.  The index is 8.9% higher than it was a year prior and 24.1% higher than the January 2020 reading.

The PPI for softwood lumber (seasonally adjusted) increased 25.4% in January following a 21.3% increase the month prior.  Since reaching its most recent trough in September 2021, prices have increased 73.9%.  According to Random Lengths data, the “mill price” of framing lumber has more than tripled since late August.

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