Residential Building Material Prices Remain Relatively Unchanged in May

Inputs to residential construction, goods less food and energy, fell 0.09% over the month according to the most recent producer price index (PPI) report published by the U.S. Bureau of Labor Statistics. The index for inputs to residential construction, goods less food and energy, represents building materials used in residential construction. This was the first decrease in the index since October of last year. While the index fell over the month, it was 2.91% higher than May of last year.  

The seasonally adjusted PPI for final demand goods decreased 0.78% in May, after increasing a revised 0.41% in April. This was the largest decrease in the index for final demand goods since a 1.24% decline in October of last year. According to BLS, around 60% of the monthly decline in May was due to a 7.11% drop in the index for gasoline.  The PPI for final demand energy and final demand foods both fell at 4.76% and 0.10% respectively. At the same time, the PPI for final demand goods, less foods and energy, rose 0.26%.

The seasonally adjusted PPI for softwood lumber fell for the first time since February, down 5% over the month. Prices for softwood lumber remain lower than last year at 8.10% below May of 2023. It was the 19^th consecutive month where the softwood lumber index was lower than one year ago.

The non-seasonally adjusted special commodity grouping PPI for copper rose 8.47% in May after rising 3.44% in April. Over the year, the index was up 17.14%. Given the global goals of electrification, copper is an important commodity for many electrical goods given its efficient conductivity properties. A recent report from the International Energy Agency shows that copper mine supply levels will not meet future demand. Expected total demand of copper is expected to outpace future expected supply by 43.38% by 2040.

The non-seasonally adjusted PPI for gypsum building materials was unchanged over the month but was up 2.09% over the year. Price growth for gypsum building materials has slowed from the growth we saw during the pandemic and has remained muted from about the second half of 2022.

The seasonally adjusted PPI for ready-mix concrete fell for the second consecutive month, down 0.13% in May after falling from 0.9% in April. Ready-mix concrete remains well above last year’s level, up 5.65% since a year ago.

The non-seasonally adjusted PPI for steel mill products rose 0.54% in May after falling in the two previous months. Year-over-year, steel mill product prices were lower than one year ago for the third straight month, down 13.81% from May of last year.