Residential construction costs continued to climb in September, with overall building material prices rising at their fastest pace since early 2023. The Producer Price Index showed a 0.3% increase in final demand, driven largely by a sharp 3.5% rise in energy prices—the first energy increase in more than a year. Input prices for new residential construction rose 0.2% for the month and 3.1% year-over-year, with building materials up 3.5% from last year as inflation gradually accelerated throughout 2025. Some categories saw dramatic increases, including parts for construction machinery (+41%) and metal trim (+31%), while ready-mix concrete remained mostly flat and softwood lumber continued to fall due to weak housing demand and oversupply.
Service inputs also ticked up, rising 0.3% in September and 2.5% from a year earlier. Trade services, the largest portion of service inputs, climbed 3.1% year-over-year, while transportation and warehousing rose 2.6%. Overall, both goods and service inputs contributed to higher construction costs, though goods, especially building materials and energy, remain the primary driver of inflation pressures within the residential construction sector.
