The price of goods used in residential construction increased 1.8% in November, driven by price increase in nearly every category, according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics. Building materials prices have increased 14.1% year-to-date (YTD), significantly above the average YTD growth of 1.5% over the past five years, according to the NAHB.
The PPI for all inputs to residential construction–which is a weighted average of goods and services, increased 0.3% in November–has climbed 17.3% over the past 12 months, and is 22.7% higher than its pre-pandemic level.
The PPI for softwood lumber (seasonally adjusted) increased 6.9% in November and has gained 16.1% since September. The recent trend of mill prices—which have more than doubled since late August and are up 37% over the past four weeks—suggests that the softwood lumber PPI is headed for another sizable gain in December.
The PPI of most durable goods for a given month is largely based on prices paid for goods shipped, not ordered, in the survey month. This can result in lags relative to cash market prices during periods of long lead times.
In November, the PPI for 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—more than quadruple the largest percentage YTD increase in November since seasonally adjusted data became available in 2012.
