Building Materials Costs Growing at Astonishing Rates

Inflation has taken a toll on consumers, but the overall cost of building materials continues to not just grow, but to do so at astonishing rates.

According to the National Association of Home Builders and its analysis of government data in the form of the producer price index, or PPI, the price of building materials was up another 0.4%, not seasonally adjusted. 

As the Bureau of Labor Statistics puts it, “The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.”

In July 2022, the year-over-year change in materials and components for construction, excluding capital investment, labor, and imports was 14.8%. The growth rate of increase is down, which is good, but price increases are cumulative, so even lower growth means prices keep getting higher.

“Prices have surged 35.7% since January 2020, although 80% of the increase has occurred since January 2021,” the organization wrote.

While software lumber has spent some significant time as a major cost driver, the current spot price is about $596, which is still elevated but much improved. “Prices have fallen 28.2% year-to-date,” as NAHB wrote, “although the extent to which the decrease has reached home builders and remodelers is unclear.” One problem that had existed was large buying at higher prices. Some of that more expensive product may still be in the system, or it could be that some players are simply keeping prices elevated to pad profits.

Ready-mix concrete has climbed in price in 17 of the last 18 months, according to the NAHB analysis, and was up 2.5% in July and has seen the largest January to July increase in the 34-year history of the data: 6.8%. Finished concrete products were up 14.4% and structural concrete block up 12.9% over the last 12 months. “Concrete pipe and prestressed concrete products prices also have climbed 21.0% and 29.9%, respectively, since July 2021,” noted the report.

Over the last 12 months, gypsum products have seen a huge jump, up 22.6%, 7.6% coming during the first six months of this year. That’s after 2021 had a 23% climb.

Steel prices have fallen about 10.1% since December 2021’s historical high. June saw a 3.7% drop with July following at -1.7%. But even with these decreases, steel is still roughly twice the price it was in January 2021.