The U.S. Bureau of Labor Statistics released its latest Producer Price Index (PPI) report, which found that the price of goods used in residential construction, minus energy, jumped 1.4 percent in March. The increase comes after the cost of construction materials rose 2.2 percent in February and 4.1 percent in January, adding up to an 8 percent increase since the start of the year. Year-over-year, the cost of building materials has risen 20.4 percent and is up 33 percent since the start of the pandemic in March 2020.
Services inputs to residential construction saw even larger jumps, up 3.2 percent in March, 5.1 percent in February and 6.2 percent in January, for a total increase of 15.2 percent in 2022. The price index for services inputs to residential construction is up 18.5 percent year-over-year and 39 percent since the start of the pandemic.
The Houzz U.S. Renovation Barometer, which tracks residential renovation market expectations among construction and design professionals, found that construction professionals are also concerned about the rising prices of gas and the impact it is having and will continue to have on their businesses. Gas prices will also be a factor for professionals deciding whether to take on a new project, with backlogs at three months for construction professionals and two months for architecture and design professionals.
“While business activity and the confidence in demand for construction and design services has been the strongest we’ve seen in the last four quarters, industry professionals are cautious about expected Q2 performance,” says Marine Sargsyan, Houzz staff economist. “Pros anticipate some impact on project inquiries due to inflation, supply chain delays and rising costs for materials, such as lumber, aluminum and even gasoline. Lengthy backlogs persist into Q2 however, signaling continued home renovation and design activity.”