Prices paid for building materials in the US increased across the board in February, according to the latest US Producer Price Index (PPI) release by the Bureau of Labor Statistics said the National Association of Home Builders Wednesday.
The indices for softwood lumber (+5.6%), gypsum products (+4.2%), OSB (+3.1%), ready-mix concrete (+0.4%), and inputs to residential construction less labour (+1.0%) all increased.
The percentage increase in softwood lumber prices (not seasonally adjusted) was the biggest since 2012, according to PPI historical data. The last time prices rose nearly this sharply was February 2017 (+4.7%), which marked the first month of price increases after the last softwood lumber agreement expired.
The increase in OSB prices follows a two-month, -22.9% decrease. After the brief reprieve, however, OSB prices in February 2018 are now +35% higher than they were two years prior.
BLS also reported that prices paid for gypsum products rose +4.2% (seasonally adjusted) in February, the largest increase since April 2016. Although prices increased substantially in February 2017 as well (+3.2%), the average monthly increase during the intervening 11 months was +0.3%. During that period, prices advanced more than +1% only once (+1.6% in June 2017).
Most of the advance in prices paid for services is traceable to a +0.3% increase in the index for services less trade, transportation, and warehousing. In contrast, margins for machinery, equipment, parts, and supplies wholesaling fell -1.4 percent.

US Producer Price Index, Softwood Lumber: Feb 2018

US Building Materials Prices: Feb 2018

Explained NAHB Eye on Housing Wednesday two important factors drive disparities between price changes builders have experienced and the PPI index changes:

1. The producer price index tracks prices paid by wholesalers, distributers, and retailers rather than what those businesses charge customers.
2. The index does not include prices paid for Canadian products as it does not include imports (just as the consumer price index does not reflect prices paid for exports).

The economy-wide PPI increased +0.2% in February. A -0.1% decline in prices paid for goods was more than offset by the +0.3% increase in the index for final demand services. Prices paid for core goods (i.e. goods excluding food and energy) rose +0.2% and the index for final demand less food, energy, and trade services climbed +0.4%.
The -0.1% decline in prices for final demand goods was the first decrease since May 2017. Prices for fresh and dry vegetables led the February decrease, dropping -27.1%. The indexes for gasoline, diesel fuel, and light motor trucks also fell, while prices paid for residential natural gas increased.