Building Material Prices Continue to Rise in March

Inputs to residential construction, goods less food and energy, increased for the fifth straight 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.

The non-seasonally adjusted index increased 0.21% in March following a 0.54% increase in February and a 1.25% in January. While the index increases are slowing, the index continues to grow at a faster rate than 2023 as the average monthly change in 2023 was 0.15%. Additionally, the index increases for the first three months of 2024 mirrors previous years, showing consistent monthly increases for January, February and March. The last time the index did not increase in March was 2019. Over the year, the index was up 2.22% in March, slightly lower than the February yearly increase of 2.23%.

The seasonally adjusted PPI for final demand goods decreased 0.12% in March, after increasing a revised 1.17% in February. The PPI for final demand energy fell 1.56%, final demand food rose 0.83% and final demand goods, less food and energy, rose 0.05%. Year-over-year, the PPI for final demand goods was up 0.87%.

The seasonally adjusted PPI for softwood lumber rose for the first time since July of 2023, up 1.90% in March from February. Softwood lumber prices were 6.76% lower in March 2024 when compared to 2023. This yearly decline was the 17th straight, as lumber prices in 2023 were much more stable than the prices between 2020 and 2022. Compared to March of 2020, the PPI for lumber was 5.98% higher in March of 2024.

The non-seasonally adjusted PPI for gypsum building materials increased for the second straight month rising 2.24% in March after an increase of 2.95% in February. The index reached a new high in March and was 1.33% higher than one year ago.

The seasonally adjusted PPI for ready-mix concrete continued to climb higher as it rose 0.05% in March, after rising 0.84% in February. Over the year, ready-mix concrete prices were 7.00% higher.

The non-seasonally adjusted PPI for steel mill products dropped after rising for three straight months, declining 7.77% in March. This was the largest month-over-month decrease since February 2022 when the index fell 9.38%. Steel mill product prices were down 3.59% from March of 2023.