6 BuildersOutlook 2024Issue1
Building Materials Price Growth Plummets in 2023
According to the latest Producer Price Index ( PPI ) report , growth in the average price level of inputs to residential construction less energy ( i . e ., building materials ) fell from 15 % in 2022 to 1.3 % in 2023 ( not seasonally adjusted ). On a monthly basis , building materials prices rose 0.1 % in December after increasing 0.1 % in November ( revised ). Monthly price increases averaged 0.2 % in 2023 , down from 1.5 % in 2021 and 0.7 % in 2022 .
Here is a breakdown by building material :
Softwood Lumber : The PPI for softwood lumber ( seasonally adjusted ) declined 2.3 % in December , the third consecutive decrease and the fourth over the past five months . The index has fallen 14.5 % since reaching its 2023 high in July .
On an annual basis , prices declined 31.3 % in 2023 after falling 3.2 % in 2022 . Although the 33.5 % two-year decrease is massive in historical terms , prices remain 22.7 % above the 2019 level as the index skyrocketed 84.6 % between 2019 and 2021 .
Gypsum Building Materials : The PPI for gypsum building materials declined 0.3 % in December and have not increased since March 2023 . The index decreased 2 % over the past 12 months , after increasing 44.6 % over the two years ending December 2022 .
Ready-Mix Concrete ( RMC ): RMC prices decreased 0.2 % in November ( seasonally adjusted ), just the fourth decline over the last 36 months , because of a 0.9 % price decline in the South ; prices in the Northeast , Midwest , and West regions were unchanged . The average price of RMC increased 11.2 % in 2023 and 10.3 % in 2022 ( NSA ), combining for the second-largest two-year increase since 2000 .
Steel Mill Products : Steel mill products prices climbed 3.3 % in December , the first increase since May . Steel mill products annual average prices declined 16.1 % in 2023 after increasing 8.7 % in 2022 and the historic 90.3 % increase of 2021 . Prices are 31.2 % lower than their 2021 peak but remain 65.1 % higher than they were in January 2020 .
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