Thursday, May 29, 2025
According to the NAHB (National Association of Home Builders) Eye on Housing report, costs for materials used in new residential construction, excluding labor, capital investment, and imports, increased by 0.8% in March before declining by 0.4% in April. These numbers are derived from the U.S. Bureau of Labor Statistics’ most recent Producer Price Index (PPI) report. In contrast to the Consumer Price Index, which gauges what consumers spend and takes into account both imports and domestic goods, the PPI tracks the prices that domestic producers receive for their goods and services.
The New Residential Construction Price Index’s inputs increased by 0.6% from April of the previous year. Both the goods and services components of the index grew by 0.6% and 0.6%, respectively, throughout the course of the year. In contrast, final demand for goods climbed by 0.5% and final demand for services increased by 3.3% during the year, while the total final demand index, which accounts for all commodities and services in the economy, increased by 2.4%.
At about 60% of the overall residential building inputs price index, the products component is more significant. In April, there was a 0.2% decrease in the cost of inputs for new home building. One component of the input products to the residential building index measures energy inputs, whereas the other component measures goods less energy inputs. The latter of these two components, which accounts for about 93% of the products index, simply indicates building materials utilized in residential construction.
Although costs for energy inputs increased by 0.1% from March to April, they were 17.6% less than they were a year ago. The cost of building materials increased 2.2% over the previous year but decreased 0.3% between March and April. This is the ninth consecutive month that input energy costs have decreased, indicating that energy costs have continued to decline year over year. In April, service input prices for residential construction saw their first monthly decrease in five months, falling by 0.6%. The cost of service inputs has increased by 0.6% year over year. Three distinct components make up the price index for service inputs used in residential construction: trade services, transportation and warehousing services, and services excluding trade, transportation, and warehousing services (other services).
Trade services account for over 60% of the total, followed by other services (about 29%) and transportation and warehousing services (about 11%). Trade services, the biggest component, increased by 0.2% over the previous year. Over the year, the other services component increased by 1.4%. Finally, compared to April of last year, the cost of transportation and storage services increased by 0.6%.
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