Prices Paid for Building Materials Increase in July

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Prices paid for goods used in residential construction increased by 0.7% in July (not seasonally adjusted) according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics.

Building materials prices have declined an average of 0.1% per month over the last 12 months, compared to an average monthly increase of 0.8% during the same period 2017-2018. The price of goods used in residential construction has risen 2.8% in 2019, roughly half the pace of 2018 increases, year-to-date.

The PPI report shows that softwood lumber prices rose 2.0% (not seasonally adjusted) in July—the first increase in four months. Even after the increase, the index for softwood lumber is nearly 20% lower than it was in July 2018.

According to Random Lengths data, the increase in framing lumber prices between June and July was greater than 6.0%. However, the discrepancy is likely due to timing differences in the surveys, as the PPI report does not include all of the price declines that the market experienced in late July.

The price index for gypsum products reversed its downward trend in July, increasing 2.2% (seasonally adjusted). Gypsum prices have increased in four of the prior 12 months, but have declined by 4.1% and 7.3% since January 2019 and July 2018, respectively.

This marks only the second year since 2012 in which the PPI for gypsum products has been lower in July than it was in January.

Prices paid for lumber and plywood fell 0.3% (NSA) in July, while the index for goods used in residential maintenance and repair increased 0.6% (NSA) and the prices of prepared asphalt and tar roofing products was unchanged (NSA). The 12-month changes in these three indices was -15.9%, -0.7%, and +5.0%, respectively.



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