In August, the prices for inputs to new residential construction, excluding labor, capital investment, and imports, saw a slight decrease of 0.1%, as reported by the U.S. Bureau of Labor Statistics’ Producer Price Index (PPI). Year-over-year, the index increased by 0.8%, down from a 1.8% rise in July. This index is divided into goods and services components, with goods showing a modest annual increase of 0.2% while services rose by 1.9%. For context, the overall final demand index saw a 1.7% increase in August, reflecting flat demand for goods but a 2.6% rise in services.
The goods component, which constitutes about 60% of the residential inputs price index, remained flat in August after a 0.1% rise in July. When focusing on building materials, which account for roughly 93% of the goods index, prices increased by 1.6% year-over-year, a notable decrease from 2.5% growth in April and significantly lower than the 14.7% increase in August 2022. Meanwhile, the prices for service inputs to residential construction fell by 0.2% in August, driven mainly by trade services, which represent about 60% of the service inputs. This shift indicates a stabilization in construction input costs, providing some relief for professionals in the remodeling and contracting industries.
