Year-to-date prices for goods used in residential construction reached a record high during the month of October, NAHB's Eye on Housing reports. In 2020, prices for building materials increased at a rate of 4.5% from the start of the year to October, but during the same period in 2021, year-to-date prices increased 12.2%.
The October increase comes after two consecutive monthly declines caused by significant drops in lumber and plywood prices. In comparison, the PPI for softwood lumber increased 9.1% in October, which was the first monthly increase since May.
The prices of goods used in residential construction ex-energy climbed 0.8% in October (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The increase comes on the heels of two consecutive monthly declines largely driven by steep declines in lumber and plywood prices. The price index of services inputs to residential construction decreased 1.3% in October as a reduction in the gross profit margins of wholesalers and retailers outweighed continued increases in transportation, warehousing, and professional services.
Building materials prices have increased 12.2% year-to-date after climbing 4.5% over the same period in 2020. In contrast, the price index of services inputs to residential construction has increased less in 2021 (+8.1%) than it did over the first 10 months of 2020 (+12.0%).