Year-over-Year Building Material Price Growth Advances  

2025-09-10T11:19:08-05:00

Price growth for residential building materials rose for the fourth straight month in August, reaching its highest level since January 2023.  Across domestic inputs goods and services into residential construction, service prices decreased in August while goods prices slightly advanced.   Prices for inputs to new residential construction—excluding capital investment, labor, and imports—fell 0.1% in August, matching the decrease of 0.1% in July. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics. The PPI measures prices that domestic producers receive for their goods and services; this differs from the Consumer Price Index which measures what consumers pay and includes both domestic products as well as imports.   The inputs to the new residential construction price index grew 2.3% from August of last year. The index can be broken into two components—the goods component increased 2.6% over the year, while services increased 1.9%. For context, the total final demand index, which measures all goods and services across the economy, increased 2.6% over the year, with final demand with respect to goods up 2.1% and final demand for services up 2.9%. Compared to July, the August results indicate services price growth slowed while goods price growth rose according to producer prices. Input Goods The goods component has a larger importance to the inputs to residential construction price index, representing around 60%. On a monthly basis, the price of input goods to new residential construction was up 0.1% in August.   The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring remaining goods. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.   Energy input prices fell 1.8% in August and were 7.5% lower than one year ago. Building material prices were up 0.3% in August and up 3.4% compared to one year ago. This was the second straight month of above three percent price growth, after increasing 3.3% in July. The August yearly increase was the largest since building material prices rose 4.9% in January of 2023.  Input Services Prices for service inputs to residential construction reported a decrease of 0.5% in August. On a year-over-year basis, service input prices are up 1.9%. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component (other services).   The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 2.0% from a year ago. The other services component was up 1.5% over the year.  Lastly, prices for transportation and warehousing services rose 1.9% compared to August of last year.   Expanded Inputs to New Construction Data Within the PPI that BLS publishes, new experimental data was recently published regarding inputs to new construction. The data expands existing inputs to industry indexes by incorporating import prices with prices for domestically produced goods and services. With this additional data, users can track how industry input costs are changing among domestically produced products and imported products. This data focuses on new construction, but the complete dataset includes indices across numerous industries that can be found here on BLS website.  New construction input prices are primarily influenced by domestically produced goods and services, with domestic products accounting for 90% of the weight of the industry index for new construction. Imported goods make up the remaining 10% of the index.   The latest available data, for June 2025, showed that domestically produced goods continue to have faster price growth compared to imported goods used in new construction. On a year-over-year basis, the index for domestic goods increased 2.3%, while prices for imported goods fell 1.1% over the same period. Comparatively, service prices have risen more than good prices over the past year, rising 3.0% year-over-year. The combined index for inputs to new construction is up 2.1% on a yearly basis.    Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Year-over-Year Building Material Price Growth Advances  2025-09-10T11:19:08-05:00

Building Material Prices Rise in July

2025-08-14T10:28:37-05:00

Prices for residential building materials rose again in July, marking the largest year-over-year increase in over two years. The underlying price growth trend remained the same, with service prices continuing to grow at a faster pace than goods prices. Similar to last month, parts for construction machinery and metal molding/trim experienced significant price growth, as both increased over 25% compared to last year. Prices for inputs to new residential construction—excluding capital investment, labor, and imports—rose 0.2% in July, following a 0.8% increase in June. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics. The PPI measures prices that domestic producers receive for their goods and services; this differs from the Consumer Price Index which measures what consumers pay and includes both domestic products as well as imports. The inputs to the new residential construction price index grew 2.8% from July of last year. The index can be broken into two components­—the goods component increased 2.4% over the year, while services increased 3.3%. For comparison, the total final demand index, which measures all goods and services across the economy, increased 3.3% over the year, with final demand with respect to goods up 1.9% and final demand for services up 4.0%. Input Goods The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. On a monthly basis, the price of input goods to new residential construction was up 0.4% in July. The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring remaining goods. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index. Energy input prices jumped up 3.9% between June and July but were 8.1% lower than one year ago. Building material prices were up 0.2% between June and July and up 3.3% compared to one year ago. Tariffs on building materials do not directly show up in the PPI data because the PPI measures prices for domestically produced goods and services. In fact, tariffs and taxes are explicitly excluded from the PPI. Despite this, price changes in reaction to tariffs are included in the PPI, meaning price increases to pass on increased costs of materials will show up in this pricing data.  Announced tariffs in recent months have resulted in material increases across a few different goods, specifically certain metal products and equipment. In July, the largest year-over-year input price increase was for construction machinery and equipment parts, reporting a 31.4% increase over the year. Meanwhile, metal molding and trim prices were up 25.6%, fabricated steel plate prices were up 14.3%, and nonferrous wire/cable up 10.5%. Metal commodities have been the primary targets of tariffs, with 50% tariffs in effect on steel and aluminum products and a 50% tariff on semifinished products of copper. Input Services Prices for service inputs to residential construction reported a decrease of 0.2% in July. On a year-over-year basis, service input prices are up 3.3%. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component (other services).  The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 5.2% from a year ago. The other services component was up 1.2% over the year.  Lastly, prices for transportation and warehousing services fell 0.6% compared to July of last year. Inputs to New Construction Satellite Data Within the PPI that BLS publishes, new experimental data was recently published regarding inputs to new construction. The data expands existing inputs to industry indexes by incorporating import prices with prices for domestically produced goods and services. With this additional data, users can track how industry input costs are changing among domestically produced products and imported products. This data focuses on new construction, but the complete dataset includes indices across numerous industries that can be found here on the BLS website. New construction input prices are primarily influenced by domestically produced goods and services, with domestic products accounting for 90% of the weight of the industry index for new construction. Imported goods make up the remaining 10% of the index. The latest available data, for May 2025, showed that domestically produced goods have experienced faster price growth compared to imported goods used in new construction. On a year-over-year basis, the index for domestic goods increased 1.6%, while prices for imported goods rose 0.1% over the same period. Comparatively, service prices have risen more than good prices over the past year, rising 2.7% year-over-year. Across the three indexes, all inputs remain at higher levels compared to pre-pandemic prices. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Building Material Prices Rise in July2025-08-14T10:28:37-05:00

Producer Prices for Metals and Equipment Show Large Increases

2025-07-16T12:19:50-05:00

Residential building material prices rose in June, driven primarily by higher construction machinery and equipment part prices. Metal commodities also experienced significant increases, following recently implemented tariffs on steel and aluminum.  Meanwhile, price growth for services used in construction continues to outpace both domestic and imported goods.  Prices for inputs to new residential construction—excluding capital investment, labor, and imports—rose 0.7% in June, following a (revised) flat change in May. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics. The PPI measures prices that domestic producers receive for their goods and services; this differs from the Consumer Price Index which measures what consumers pay and includes both domestic products as well as imports.   The inputs to the New Residential Construction Price Index grew 2.6% from June of last year. The index can be broken into two components—the goods component increased 2.1% over the year, while services increased 3.3%. For comparison, the total final demand index, which measures all goods and services across the economy, increased 2.3% over the year, with final demand with respect to goods up 1.7% and final demand for services up 2.7%.  Input Goods The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. On a monthly basis, the price of input goods to new residential construction was up 0.2% in June.   The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring remaining goods. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.   Energy input prices were up 0.9% between May and June but were 7.4% lower than one year ago. Building material prices were up 0.1% between May and June and up 2.9% compared to one year ago.   Tariffs on building materials do not directly show up in the PPI data because the PPI measures prices for domestically produced goods and services. In fact, tariffs and taxes are explicitly excluded from the PPI. Despite this, price changes in reaction to tariffs are included in the PPI, meaning price increases to pass on increased costs of materials will show up in this pricing data. Announced tariffs in recent months have resulted in material increases across a few different goods, specifically certain metal products and equipment. In June, the largest year-over-year price increase was for construction machinery and equipment parts, reporting a 24.2% increase over the year. Meanwhile, metal molding and trim prices were up 15.1%, fabricated steel plate prices were up 13.6%, ornamental and architectural metal work prices were up 9.0%, and fabricated structural metal prices were up 9.0% compared to last year. Metal commodities have been the primary targets of tariffs, with 50% tariffs in effect on steel and aluminum products and a potential 50% tariff on copper products coming this August. Input Services Prices for service inputs to residential construction reported an increase of 1.5% in June. On a year-over-year basis, service input prices are up 3.3%. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component (other services). The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 4.7% from a year ago. The other services component was up 1.1% over the year. Lastly, prices for transportation and warehousing services advanced 2.1% compared to June of last year. Inputs to New Construction Satellite Data Within the PPI that BLS publishes, new experimental data was recently published regarding inputs to new construction. The data expands existing inputs to industry indexes by incorporating import prices with prices for domestically produced goods and services. With this additional data, users can track how industry input costs are changing among domestically produced products and imported products. This data focuses on new construction, but the complete dataset includes indices across numerous industries that can be on the BLS website. New construction input prices are primarily influenced by domestically produced goods and services, with domestic products accounting for 90% of the weight of the industry index for new construction. Imported goods make up the remaining 10% of the index.   The latest available data, for April 2025, showed that domestically produced goods have experienced faster price growth compared to imported goods used in new construction. On a year-over-year basis, the index for domestic goods increased 0.4%, while prices for imported goods fell 0.1% over the same period. Comparatively, service prices have risen more than good prices over the past year, rising 3.1% year-over-year. Across the three indexes, all inputs remain at higher levels compared to pre-pandemic prices.   Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Producer Prices for Metals and Equipment Show Large Increases2025-07-16T12:19:50-05:00

Is U.S. Lumber Self-Reliance Possible?

2025-06-24T10:19:11-05:00

Lumber cost uncertainty has risen from the start of the year, driven in part by potential higher tariffs, particularly on Canadian softwood lumber. Despite the continued use and threat of tariffs, U.S. sawmill and wood preservation firms have not increased production to a level that replaces imports. In fact, utilization rates continue to fall, meaning they have the capacity to produce more lumber but are simply not operating at that level. As these firms produce at lower levels, their employment has fallen over the past few quarters. At the same time, reduced foreign competition and artificially higher prices have lessened the incentive for firms to expand output, even as demand remains high. As a result, U.S. mills remain unable to meet the nation’s full lumber consumption needs. In the first quarter of 2025, sawmill and wood preservation firms continued to report lower capacity utilization coupled with stagnant production. The utilization rate, a ratio of actual production and potential production, was 64.4% in the first quarter on a four-quarter moving average basis. The utilization rate has continued to drop since 2017, as capacity (or the capability to produce) has increased, but production has remained lower than in 2018. By combining the Federal Reserve’s production index and the Census Bureau’s utilization rate, we can compose a rough index estimate of what the current production capacity is for U.S. sawmills and wood preservation firms. Shown below is a quarterly estimate of the calculated production capacity index with production index and utilization rate estimates.   Based on the data above, sawmill capacity has increased from 2015 but remains lower than peak levels in 2011. Most of the recent capacity gains took place in 2023, followed by little gain over the course of 2024. As evident above, there is ample room to increase production of domestic lumber, but current production levels remain much unchanged over the past several years. Looking at the Producer Price Index, lumber prices remain higher than 2024. At current pricing levels, producers may see no benefit of increasing output, as it would push prices lower since demand has fallen from the start of the year. Notably, even when prices were historically high in 2021 and 2022, producers were unable to increase their production significantly during these periods, potentially due to supply chain disruptions. Employment at sawmills and wood preservations firms fell again in the first quarter to 88,533 workers. This marks the third consecutive quarter where employment fell in this industry. Tariff policies to protect the U.S. lumber industry have been in place since 2017 in the form of antidumping/countervailing duties. Tariff policies are typically intended to provide stability to the industry and increase employment but here, we are seeing the opposite effect. These policies specifically place duties on imports of Canadian softwood lumber, where nearly a quarter of the U.S. softwood lumber supply originates. The current AD/CVD rates on Canadian softwood lumber are expected to double this fall to over 30%. Due to U.S. lumber production remaining level since the initial tariff policies were enacted in 2017, doubling these duty costs will likely not increase supply but simply increase costs. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Is U.S. Lumber Self-Reliance Possible?2025-06-24T10:19:11-05:00

Building Material Price Growth Minimal in April

2025-05-27T13:21:26-05:00

Prices for inputs to new residential construction—excluding capital investment, labor, and imports—fell 0.4% in April, following a (revised) increase of 0.8% in March. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics. The PPI measures prices that domestic producers receive for their goods and services; this differs from the Consumer Price Index which measures what consumers pay and includes both domestic products as well as imports. The inputs to the New Residential Construction Price Index grew 0.6% from April of last year. The index can be broken into two components­—the goods component also increased 0.6% over the year, with services increasing 0.6% as well. For comparison, the total final demand index, which measures all goods and services across the economy, increased 2.4% over the year, with final demand with respect to goods up 0.5% and final demand for services up 3.3% over the year. Input Goods Prices The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. For the month, the price of input goods to new residential construction was down 0.2% in April. The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring goods less energy inputs. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index. Energy input prices were up 0.1% between March and April but were 17.6% lower than one year ago. Building material prices were down 0.3% between March and April but up 2.2% compared to one year ago. Energy costs have continued to fall on a year-over-year basis, as this marks the ninth consecutive month of lower input energy costs. Input Services Prices Prices for service inputs to residential construction reported its first monthly decline in five months, down 0.6% in April. On a year-over-year basis, service input prices are up 0.6%. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component (other services). The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 0.2% from a year ago. The other services component was up 1.4% over the year. Lastly, prices for transportation and warehousing services advanced 0.6% compared to April last year. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Building Material Price Growth Minimal in April2025-05-27T13:21:26-05:00

How Lumber Prices are Affecting Homebuilders

2021-05-13T12:28:42-05:00

They say a picture can tell a thousand words. Well, this new visual representation of the impact of lumber pricing on homebuilders certainly fits. Published on May 8th by Visual Capitalist, the amazing infographic shows the impact of lumber

How Lumber Prices are Affecting Homebuilders2021-05-13T12:28:42-05:00
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