Prices for residential construction materials continue to rise

Softwood lumber increased 6.9% in November and has gained 16.1% since September.
a train traveling down train tracks near a forest
Softwood lumber prices have shown big price gains in recent months.

The price of materials used in residential construction increased 1.8% according to the latest Producer Price Index from the Bureau of Labor Statistics.

However, the price index of services inputs in residential construction fell 0.8%. This continues four straight months of declines with the index falling 10.1% during the span.

Analysis from the National Association of Home Builders (NAHB) shows that all inputs for residential construction have climbed 17.3% over the past 12 months and is 22.7% higher than its pre-pandemic level.

Here’s how the NAHB breaks down recent increases:

  • Softwood lumber (seasonally adjusted) increased 6.9% in November and has gained 16.1% since September. The recent trend of mill prices suggests that the softwood lumber PPI is headed for another sizable gain in December. 
  • Steel mill products prices rose 2.4% in November, the smallest monthly increase since May 2021. The last monthly price decrease in steel mill products occurred in August 2020, and the index has climbed 151.4% in the months since.
  • Ready-mix concrete (RMC) gained 0.9% in November after increasing 0.1% in October. The index for RMC has risen 8.3% since January 2020 and 6.6% year to date — the largest year-to-date increase in November since 2005.
  • Gypsum products declined (-0.2%) for only the second time in 2021. Gypsum products prices have climbed 19.8% over the past 12 months and are up 18.8% in 2021.
  • Exterior and interior architectural coatings increased 1.5% and 0.2%, respectively, in November. Neither index has declined since January 2021.

In regard to residential construction services, building materials wholesaling decreased 1.4% in November, and building materials retailing declined 1.6%.

The wholesale and retail services indices measure changes in the nominal gross margins for goods sold by retailers and wholesalers.

Gross profit margins of retailers, in dollar terms, have declined 22.1% since reaching an all-time high in June 2021, but remain 33.4% higher than the January 2020 level, the NAHB reported.

The latest PPI can be found here.