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According to the latest Producer Price Index PPI report by the United States Bureau of Labor Statistics, the rate of growth in average prices for inputs to residential construction excluding energy - commonly known as building materials - has significantly decreased from 15 in 2022 to 1.3 in 2023 on an unadjusted basis.
On a month-over-month basis, prices for building materials experienced an increase of 0.1 in December following a similar rise of 0.1 in November with revised figures. The monthly price hikes averaged around 0.2 throughout the year 2023, markedly down from the increases observed at 1.5 in 2021 and 0.7 in 2022.
Let's break down these findings by specific types of building materials:
Softwood Lumber: The PPI for softwood lumber seasonally adjusted showed a decrease of 2.3 in December, marking its third consecutive decline and the fourth reduction over the past five months. This price index has witnessed a drop of 14.5 since it hit its peak value in July.
On an annual scale, prices for softwood lumber fell by 31.3 in 2023 compared to 3.2 decline in 2022. Although the significant decrease of 33.5 over a two-year period represents a monumental change from historical perspectives, these costs remn 22.7 higher than those recorded in 2019 due to an extraordinary spike of 84.6 between 2019 and 2021.
Gypsum Building Materials: The PPI for gypsum building materials experienced a decrease of 0.3 in December, with no increase since March 2023. This index recorded a year-over-year decline of 2, contrasting the previous significant climb of 44.6 over two years ing in December 2022.
Ready-Mix Concrete RMC: The price for ready-mixed concrete decreased by 0.2 on a seasonally adjusted basis in November, marking its fourth decline in the last 36 months due to a 0.9 drop in prices in the South region; prices remned unchanged in the Northeast, Midwest, and West regions of the country. The average price for RMC rose by 11.2 in 2023 compared to an increase of 10.3 in 2022 not seasonally adjusted, representing one of the second-largest two-year increases since the year 2000.
Steel Mill Products: Steel mill products' prices increased by 3.3 in December, marking its first rise since May. In comparison to previous years, average steel mill product prices decreased by 16.1 in 2023 after experiencing a growth rate of 8.7 in 2022 and an unprecedented increase of 90.3 observed in 2021. These costs are now 31.2 lower than their peak level in 2021, but they still remn 65.1 higher compared to the January 2020 prices.
David Logan, NAHB's Director of Tax and Trade Policy Analysis, provided more detled insights into these findings on his post titled Eye on Housing accessible through our official blog.
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This article is reproduced from: https://www.nahb.org/blog/2024/01/building-materials-prices-plummet-in-2023
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Building Material Prices Decrease Significantly Residential Construction Input Costs Drop Softwood Lumber Prices Fall 33 Annually Gypsum Materials Experience Year Over Year Decline Ready Mixed Concrete Pricing Trends Lower Steel Mill Products See Increase in December