NAHB: Slowing Building Material Price Growth Another Signal Inflation Is Cooling
According to the latest Producer Price Index (PPI) report, which is produced by the Bureau of Labor Statistics the price level of inputs to residential construction less energy (i.e., building materials) was unchanged in June 2023, according to the most recent data available, as reported by National Association of Home Builders Eye on Housing blog.
March 2023 was the last month prices increased. The index gained 0.5 percent, year-to-date, and has not increased 1.0 percent or greater in any month since March 2022.
The PPI for all final demand goods was unchanged in June following a 1.6 percent decline in May. Year-over-year, the index declined 0.2 percent while the PPI for final demand goods less food and energy increased 2.0 percent. The growth rates of the indices for final demand goods and final demand goods less food and energy have slowed 12 and 15 consecutive months, respectively.
The PPI for goods inputs to residential construction, including energy, has decreased 3.6 percent over the past 12 months—the largest 12-month decline since October 2009. June was the second consecutive month in which prices were unchanged.
The PPI for Softwood lumber increased 3.9 percent in June—the second increase over the past three months.
Although prices are up 7.2 percent over that period, the index has decreased 20.9 percent over the past year and has fallen by more than half since June 2021.
Prices were unchanged in the Northeast and Midwest, but they increased 0.2 percent and 0.5 percent in the South and West, respectively. Year-to-date, prices increased the most in the Midwest, followed by the Northeast, South, and West regions.
The price index of services inputs (excluding labor) to residential construction increased 0.2 percent in June after a 1.0 percent decline in May. Prices have declined 8.8 percent over the past year but have stabilized in 2023, down 0.1 percent through June.
The price of truck and rail transportation of freight decreased 2.1 percent and 0.4 percent, respectively, in June while the PPI for ocean freight increased 0.4 percent. Trucking freight prices have declined 13.7 percent over the past year with both long-distance (-15.1 percent) and local (-9.2 percent) motor carrying prices falling 9.2 percent and 4.1 percent, respectively.
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