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NAHB Housing & Economic Update
Slowing Building Material Price Growth Another Signal Inflation Is Cooling
BY DAVID LOGAN, NAHB DIRECTOR OF TAX AND TRADE ANALYSIS
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According to the latest Producer Price Index report, the price level of inputs to residential construction less energy (i.e., building materials) was unchanged in June 2023 (not seasonally adjusted). March 2023 was the last month prices increased. The index has gained 0.5%, year-to-date, and has not increased 1% or greater in any month since March 2022.
The Producer Price Index for all final demand goods was unchanged in June following a 1.6% decline in May (seasonally adjusted). Year-over-year, the index declined 0.2% while the PPI for final demand goods less food and energy increased 2.0% (not seasonally adjusted). The growth rates of the indices for final demand goods and final demand goods less food and energy have slowed 12 and 15 consecutive months, respectively, neither of which has occurred since the inception of the series.
The PPI for goods inputs to residential construction, including energy, has decreased 3.6% over the past 12 months— the largest 12-month decline since October 2009. June was the second consecutive month in which prices were unchanged.
Gypsum Building Materials
The PPI for gypsum building materials fell 0.3% in June after declining 1.1% in both April and May. Other than lumber, no building material posted 12-month price increases as large as those of gypsum building products in 2021 and 2022. Over the past nine months, however, those increases have slowed from 20.3% to 3.0%.
Steel Mill Products
Steel mill products prices got a reprieve in June, declining 0.6% after a fourmonth period during which prices climbed 12.4%. Even after that period of rising prices, however, the index is 18.0% lower than it stood in June 2022.
Softwood Lumber
The PPI for softwood lumber (seasonally adjusted) increased 3.9% in June—the second increase over the past three months. Although prices are up 7.2% over that period, the index has decreased 20.9% over the past year and has fallen by more than half since its June 2021 peak.
