Rising material costs are contributing to increased homebuilding expenses, with softwood lumber seeing the most dramatic cost increase. In February, prices for construction inputs—excluding capital, labor, and imports—rose 0.5%, and the inputs to the U.S. Bureau of Labor Statistics’ New Residential Construction Price Index grew 0.7% from February of last year, according to the National Association of Home Builders’ Eye On Housing blog.
The index consists of goods and construction services, with goods prices contributing to most of the increases. Goods prices grew by 1.2% annually, while services saw a slight 0.1% decline. Key materials like nonmetallic mineral and metal products were the top cost drivers, followed by lumber and wood products. While most wood product prices remained stable through 2024, softwood lumber saw the most growth, with prices up 11.7% year-over-year.
The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring goods less energy inputs.
The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index. Read more
