Adobe Stock/Jeff Metzger

For the second consecutive month, softwood lumber (+4.0%) led the way in price increases for building materials, followed by oriented strand board (+2.2%, not seasonally adjusted), says David Logan in the NAHB's Eye on Housing blog. According to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics for June, the indexes for ready-mix concrete (-0.3%) and gypsum products (-0.6%) both declined for the second month straight.

The price index for residential construction inputs (goods) has increased each of the last six months. The index has already risen 5.4% in 2018, more than quadrupling the year-to-date increase at this time in 2017 (see above). Since January 2017, the index for prices paid for goods inputs to residential construction has only declined twice—in May and December of 2017—each time falling just 0.1%.

The June PPI release continued to capture increases in prices paid for softwood lumber. The index for softwood lumber has increased every month but April in 2018. As prices have receded slightly over the last month, July’s PPI report will likely show a small decrease in the index for softwood lumber. Even after accounting for the most recent price movements, the average price paid for softwood lumber in 2018 remains the highest on record according to Random Lengths data—22.5% above the prior record set in 1997.

The 2.2% increase in oriented strand board (OSB) prices follows May’s 4.7% gain and represents the fifth consecutive monthly increase. Over the past 18 months, the index for OSB prices has fallen only four times. After a three-month downward trend in late 2017, OSB prices have risen 29.1% over the past five months, according to BLS.

BLS also reported that prices paid for gypsum products declined in June (-0.6%, seasonally adjusted). This is the first time since May-June 2016 that gypsum prices have declined in consecutive months. Gypsum prices are essentially unchanged since December 2017, thanks in large part to 2.0% and 2.6% decreases in January and May, respectively.

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