The price level of inputs to residential construction increased 0.2% in November, according to the latest Producer Price Index report. The index has increased 0.8% year-to-date, marking the smallest YTD growth through November since 2019. Overall, construction input prices decreased 0.3% in November, according to an analysis by the Associated Builders and Contractors (ABC).
“Construction input prices declined for the second straight month in November,” ABC chief economist Anirban Basu said in a prepared statement. “While much of the recent decline is due to record domestic oil production and the resulting precipitous decline in gas and diesel prices, other commodities like iron and steel and lumber products are currently more affordable than they were at the same time last year.”
The PPI for all final demand goods was unchanged in November, following a 1.4% decrease in October.
“Fal, or at the very least stable, input prices should help to control construction cost increases in the coming quarters,” Basu said. “This is a welcome development for an industry still dealing with extraordinarily elevated financing costs and rising labor costs due to ongoing worker shortages.”
Softwood lumber price declines accelerated in November, with the PPI dropping 5.8%, more than double the October decrease. The index has fallen 19.7% over the past 12 months and is lower than it has been at any point since March 2020, according to the National Association of Home Builders (NAHB).