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Residential Building Materials Prices Up

With residential construction struggling to advance, commercial construction bouncing along a bottom, and worldwide economic growth advancing at a moderate pace, there would appear to be little room for upward movement in building materials prices. However, higher energy prices continue to put pressure on builders' and suppliers' costs. Courtesy of New Jersey Construction Blog


Higher energy prices continued to be the primary force behind increases in building materials prices.

The November Producer Price Index (PPI) for finished goods rose 0.8% for the month (seasonally adjusted), up from the 0.4 percent increase October and September. It was up 3.5 percent on a year-over-year basis.

The November increase was largely driven by higher energy prices, together with higher food prices. The PPI for energy rose 2.1 percent, its fourth consecutive monthly increase, though down from October's 3.7 percent increase.

Prices for materials and components for construction were up 0.2 percent on a seasonally adjusted basis in November after a 0.1 percent rise in October and falling the four months previous to that. On a year-over-year basis the index was up 2.2 percent.

However, residential building material prices rose 0.4 percent (not seasonally adjusted), the same increase as in October. On a year-over-year basis, they were up 3.9 percent, but were still down 0.5 percent from their September 2008 record high. With material prices still low, it should be easier for construction to rebound.

Higher energy prices continued to be the prime mover behind the increase in residential construction materials cost--for example #2 diesel fuel was up 4.8 percent for the month (NSA) and 18.5 percent from a year earlier, although some other materials prices, such as softwood lumber (up 2.2 percent for the month and 5.5 percent from a year earlier) contributed as well.

Another major contributor was copper and copper products prices, which rose 6.1 percent, their fifth consecutive monthly increase, and were up 25.7 percent from November 2009. There was some offset from plywood prices, down 2.6 percent for the month (though still up 2.2 percent from a year earlier), ceramic floor and wall tile prices, down 1.7 percent and off 1 percent from a year earlier, and brick prices, down 1.7 percent and 0.4 percent lower than a year earlier.

- Courtesy of NAHB

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June 18, 2019, 8:47 am PDT

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