Building Materials Prices Fall for Second Month Straight

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According to the latest Producer Price Index report, the prices of inputs to residential construction less energy (i.e., building materials) decreased 0.1% in May 2023 (not seasonally adjusted), following a 0.2% drop in April. The index has gained 0.3%, year-to-date, a stark contrast from the 10.2% and 4.9% YTD increases seen in 2021 and 2022, respectively.

The PPI for goods inputs to residential construction, including energy, declined 0.5% as energy prices drove the index lower. The index has declined 2.7% over the past 12 months but is 36.0% higher than it stood in January 2020.

Gypsum Building Materials

The PPI for gypsum building materials fell 1.1% for the second month straight and is down 0.4%, year-to-date. Gypsum building materials prices are 4.0% higher than they were a year ago but at the lowest level since July 2022.

Softwood Lumber

The PPI for softwood lumber (seasonally adjusted) decreased 3.1% after increasing 6.2% the prior month. Softwood lumber prices have declined 10 of the past 12 months and are 41.9% lower than they were one year ago.

Ready-Mix Concrete

Ready-mix concrete (RMC) prices were revised down for April in the latest release. As a result, prices declined last month for the first time since March 2022. Unfortunately, price growth returned in May as the RMC index increased 1.6%–the largest monthly increase in nearly a year. RMC prices have risen 2.8% YTD—the same increase seen through May 2022—and are up 13.0% over the past 12 months.

Steel Mill Products

Steel mill products price growth continued to accelerate in May as the index rose 5.2%. This comes on the heels of 3.5% and 1.0% increases in April and March, respectively. after climbing 3.1% in February and March combined. The PPI for steel mill products declined eight consecutive months ending in January, falling 27.9% over that span. However, prices have climbed 12.4% in the four months since.

Services

The price index of services inputs to residential construction decreased 1.0% in May after rising 0.5% in April. Prices have declined 12.4% over the past year but have been relatively stable in 2023, down just 0.5% through May.



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1 reply

  1. Great to see that construction materials prices are falling for the second month in a row! This indicates that construction costs for projects will be lower, which is welcome news for those seeking construction loans. Check us out at builderloans.net and they will be able to help you with it

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