Softwood Lumber and Paint Drive Building Material Price Growth in January

Building material prices increased 20.3% year over year in January, according to the latest Producer Price Index.

The prices of goods used in residential construction increased in January, according to the latest Producer Price Index (PPI) from the Bureau of Labor Statistics, driven by a 25.4% increase in softwood lumber and a 9% increase for indoor and outdoor paint. According to the NAHB, building material prices increased 20.3% year over year and have risen 28.7% since January 2020.

The PPI for softwood lumber (seasonally adjusted) increased 25.4% in January following a 21.3% increase the month prior. Since reaching its most recent trough in September 2021, prices have increased 73.9%. According to Random Lengths data, the “mill price” of framing lumber has more than tripled since late August.

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 and is why last month’s post indicated that “another sizable increase in the softwood lumber producer price index may be in the [January 2022] PPI report.”

In January, the PPI for gypsum products climbed 3.4%—the 11th consecutive monthly increase. Gypsum prices have decreased just once since August 2020 and have risen 31.4% since then. Gypsum products prices have gained 23.0%, year-over-year, the largest increase since data became available in 2012 and more than quadruple the 10-year average.