The prices of goods used as inputs to residential construction including and excluding energy rose 19% and 12%, respectively, year-to-date (YTD), according to data released by the Bureau of Labor Statistics.
Amongst the top 10 items whose prices have increased the most this year include building paper and building board mill products, asphalt, laminated veneer lumber and wood window and door frames, according to the data.
Laminated veneer lumber prices exceeded 20% between April and July, according to the data.
Construction input prices declined 0.6% in August compared to the previous month and nonresidential construction input prices fell 0.4% for the month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data.
NAHB economist David Logan provided more insight in a recent blog post.
"Although the recent decline in lumber prices is helping bring costs down (after having driven them up drastically earlier in the year), the decline has been offset by large increases in the prices of a multitude of other products," Logan notes.
“Though the headline number characterizing the direction of construction input prices appears favorable, many materials prices rose last month,” ABC Chief Economist Anirban Basu said. “The overall decline in materials prices, which was small, was driven by two categories in which prices declined significantly: softwood lumber (-27%) and crude petroleum (-10%). But those were exceptions. Among the categories registering monthly price increases of 3% or more were prepared asphalt, steel mill products, natural gas and fabricated structural metal products.
“Some of the recent setbacks in global supply chain recovery relate to the dislocating impacts of the delta variant, but there are other forces at work, including government policy and geopolitics,” Basu added. “As a growing number of nations around the world increase vaccination rates, the global economic recovery should continue. That will put even more upward pressure on input prices, all things remaining equal. Passage of a meaningful American infrastructure plan would further catalyze price increases."
“July was the seventh-straight month of double-digit price increases for construction inputs,” said Ken Simonson, the Association of General Contractors' chief economist. “Adding to the challenge, contractors are struggling to pass along even a fraction of these added costs onto their clients.”
“Contractors are having to pay more for materials even as it becomes harder to predict when those supplies will show up,” said Stephen E. Sandherr, the association’s chief executive officer. “Removing needless measures that are artificially inflating the cost of key materials, such as tariffs, will help employers who are struggling to cover the costs of inflation and uncertainty.”
View the Producer Price Index News Release summary here.