Building Materials Prices Increase Slightly, Held in Check by Metal, Gypsum, and Concrete Products
The prices of goods used in residential construction ex-energy climbed 1.6% in February (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. Building materials prices increased 20.4%, year-over-year, and have risen 31.3% since January 2020. Over the past five months, the index has climbed 10.6%.
The price index of services inputs to residential construction increased 3.8% in February following a 5.1% increase in January 2021 (revised). The index declined 13.5% between June and November last year but has increased 10.3% in the three months since. The index is 14.1% higher than it was a year prior and 32.6% higher than the January 2020 reading.
Steel mill products prices declined 9.9% in February, the second consecutive decrease after increases each of the prior 15 months. The last time the steel mill products PPI decreased more than nine percent was December 2008. February is the seventh consecutive month in which price increases of steel mill products have slowed or decreases have accelerated.
While January and February have been good months for the cost of derivative steel products, the PPI remains 74.4% greater than it was 12 months ago.
The PPI for ready-mix concrete (RMC) gained 0.8% in February after increasing 1.1% in January. The index for RMC has been relatively volatile since mid-2020 and has climbed 8.2%, year-over-year (YoY). Prior to January 2021, year-over-year price increases had not exceeded 8.0% since December 2006.
At the regional level, prices increased in the Northeast (2.1%), Midwest (0.7%), and South (2.0%) and West (-0.3%).
The PPI for gypsum products declined 1.9% in February, snapping an 11-month streak of increases during which the index climbed 31.4%. Gypsum products prices are up 20.7%, year-over-year.
The PPI for softwood lumber (seasonally adjusted) increased 2.6% in February following a combined 28.9% increase over the two months prior. Since reaching its most recent trough in September 2021, prices have increased 79.5%. According to Random Lengths data, the “mill price” of framing lumber has more than tripled since late August.
After a 12-month period during which the prices of exterior and interior paint increased 30.3% and 21.2%, respectively, paint prices held relatively steady in February. The prices of exterior architectural coatings gained 0.1% and interior architectural coatings PPI rose 0.3%.
Other Building Materials
The chart below shows the 2022 year-to-date changes in other relevant price indices as well as the price movements since January 2020.