According to the most recent release of the Bureau of Labor Statistics Producer Price Index (PPI), the prices of goods used as inputs to residential construction including and excluding energy have risen 19.0% and 12.0%, respectively, year-to-date (YTD).
In contrast, the index for final demand goods has climbed 7.2% and that for final demand goods less food and energy is up 5.3% since January. An even larger disparity exists between the YTD price changes of all final demand services–the PPI for which has increased 3.9%–and the subset of services used in residential construction (excluding labor), which has climbed 19.3%.
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.
Of goods inputs to residential construction, including lawn care products, the prices of these 10 have increased the most thus far in 2021:
- Steel mill products
- Building paper and building board mill products
- Asphalt
- Plastic water pipe
- Fertilizer materials
- Laminated veneer lumber
- Thermoplastic resins and plastics materials
- Structural metal joists and concrete reinforcing bars
- Wood window and door frames
- Copper pipe and tube
Over the first seven months of 2021, the majority of these products’ prices have increased many times more than they did in 2020. The price change of steel mill products is the most glaring example, increasing 81.3% YTD following a 2020 increase of 11.1%.
The prices of a subset of building materials were stable in 2020 but have seen substantial price increases in 2021.
Some building materials and inputs to building materials have seen especially acute increases over the last three months. Of the goods analyzed here, nine experienced price increases exceeding 20% between April and July:
- Laminated veneer lumber
- Building paper & building board mill products
- Fertilizer materials
- Plastic water pipe
- Fabricated structural metal
- Other engineered structural wood members
- Copper pipe and tube
- Steel mill products
- Aluminum base scrap
An additional 21 products have increased in price by 10% or more since April—five times the rise in the consumer price index over that period.