NAHB is encouraging the industry to sign a letter to the White House urging action to address the issues that threaten to derail the current housing and economic expansion.
“An important first step to address housing affordability challenges in this current high-inflation environment would be to immediately suspend tariffs on softwood lumber imports from Canada and to move quickly to enter into negotiations with Canada to pursue a new, long-term softwood lumber agreement…And seeking immediate remedies to lumber and building material supply chain bottlenecks will lower construction costs and increase production of badly needed affordable housing,” the letter states.
“As monetary policy tightens to combat the elevated pace of inflation, regulatory and economic policy should complement these changes by addressing ongoing supply-side economic problems. Keeping housing in the national forefront and addressing these critical housing affordability issues will reduce the risk of recession and help the residential construction industry to lead the economy forward.”
Meanwhile, NAHB reported today that in the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics, the prices of goods used in residential construction ex-energy (not seasonally adjusted) climbed 1.4% in March, following an upwardly revised increase of 2.2% in February and 4.1% in January. This adds up to an 8% jump in building materials prices since the start of 2022.
Building materials prices increased 20.4% year over year and have risen 33% since the start of the pandemic.
The price index of services inputs to residential construction registered even steeper increases, rising 3.2% in March, 5.1% in February and 6.2% in January. As a result, the price index of services used in home building (including trade services, transportation and warehousing) went up 15.2% since the start of the year. The index increased 18.5% year over year.
Since the start of the pandemic, services prices are now 39% higher.
Here’s how PPI for individual materials have shifted during this timeframe:
- Softwood lumber increased 6% (seasonally adjusted) in March following a 2.6% increase in February and 25.6% jump in January. As a result, the index increased 36.7% over the first three months of 2022. Since reaching its most recent trough in September 2021, prices have almost doubled, rising 90.4%.
- Gypsum products increased 1.6% (seasonally adjusted) in March. Gypsum products prices are 20.8% higher year over year.
- Ready-mix concrete came down 0.6% (seasonally) in March but remains elevated after climbing over the prior 13 months. It is 9% higher compared to the January 2021 reading.
- Steel products, in contrast, declined 4.9% (not seasonally adjusted) in March — the third consecutive monthly decrease after record-breaking increases over the prior 15 months. Although the first three months of 2022 have been good months for the cost of derivative steel products, the price index more than doubled since the start of the pandemic.
Natalia Siniavskaia, NAHB assistant vice president for housing policy research, provides more in this Eye on Housing post.
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