Building Material Prices Experience Record YTD Increases Through October

The year-to-date increase in prices through October is nearly double the previous record.

After monthly declines in August and September, the prices of goods used in residential construction ex-energy increased 0.8% in October, according to the latest Producer Price Index (PPI) report from the Bureau of Labor Statistics. Building material prices have increased 12.2% year to date (YTD) after increasing 4.5% YTD in the same period in 2020, according to the NAHB’s Eye on Housing blog.

The price of all goods inputs to residential construction (including energy) has risen 14.5% thus far in 2021, climbing more than eight times faster than over the first 10 months of 2020. The year-to-date increase is double that of the previous [record] year-to-date October increase (+7.1% in 2008).

The PPI for softwood lumber (seasonally adjusted) increased 9.1% in October—its first monthly increase since May. The index had declined by more than half over the four months prior but, as was noted in last month’s PPI post, the recent trend of cash prices “[suggested] the softwood lumber PPI [would] increase in October.”

The PPI for gypsum products increased 2.1% in October—the eighth consecutive monthly increase. Although gypsum products prices fell 3.3% between January and October 2020, the index has increased 25.7% in the months since.