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Price Growth for Building Materials Slows to Start the Year – Eye On Housing

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Residential building material prices rose at a slower rate in January, according to the latest Producer Price Index release from the Bureau of Labor Statistics. This was the first decline in the rate of price growth since April of last year. Metal products continue to experience price increases, while specific wood products are showing declines in prices.

The Producer Price Index for final demand increased 0.5% in January, after rising 0.4% in December. The January increase in final demand is linked directly to final demand services, which saw prices rise 0.8% in January. The index for final demand goods decreased 0.3% in January.

The price index for inputs to new residential construction rose 0.7% in January and was up 3.3% from last year. The price of goods used in new residential construction was up 0.9% over the month and 2.4% from last year. Meanwhile, the price for services was up 0.3% over the month and up 4.7% from last year.

Input Goods

The goods component has a larger importance to the inputs to residential construction price index, representing around 60%. On a monthly basis, the price of input goods to new residential construction was up 0.9% in January.

The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring remaining goods. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.

Energy input prices fell 0.9% in January and were 10.3% lower than one year ago. Building material prices were up 1.0% in January and up 3.3% compared to one year ago, marking the lowest year-over-year price change since July of last year.

The largest year-over-year price increases continue to show in metal products. Topping the list in January was metal molding and trim, with prices up 48.3% from last year. One product that has seen rapid price growth acceleration over the past few months has been nonferrous metal and cable with prices up 19.7%. Price declines for materials over the year are concentrated among wood products with prices for particleboard and fiberboard down 24.4%, treated wood products down 5.0%, and softwood lumber down 3.3%.

Input Services

Prices for service inputs to residential construction reported an increase of 0.3% in January. On a year-over-year basis, service input prices were up 4.7%. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation, and warehousing component (other services).

The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 7.1% from a year ago. The transportation and warehousing services rose 2.0%, while prices for other services were up 1.1% over the year.

Expanded Inputs to New Construction

Within the PPI that BLS publishes, new experimental data was recently published regarding inputs to new construction. The data expands existing inputs to industry indexes by incorporating import prices with prices for domestically produced goods and services. With this additional data, users can track how industry input costs are changing among domestically produced products and imported products. This data focuses on new construction, but the complete dataset includes indices across numerous industries that can be found here on BLS website. 

New construction input prices are primarily influenced by domestically produced goods and services, with domestic products accounting for 90% of the weight of the industry index for new construction. Imported goods make up the remaining 10% of the index.  

The latest available data, for November 2025, showed that domestically produced goods continue to have faster price growth compared to imported goods used in new construction. On a year-over-year basis, the index for domestic goods increased 3.0%, while prices for imported goods have fallen 3.0%.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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U.S. Population Growth Slows in 2025 – Eye On Housing

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According to the U.S. Census Bureau’s latest estimates, the U.S. resident population grew by 1,781,060 to a total population of 341,784,857. The population grew at a rate of 0.5%, a sharp decline from the near 1.0% growth in 2024. The growth rate was the lowest since 2021 when it grew at 0.2%. The vintage population estimates are released annually and represent the change in the U.S. population between July 1st of 2024 and 2025.

The primary source of population growth continued to be net international migration. For 2025, the level of net international migration was less than half of its level in 2024, falling from 2.7 million to 1.3 million. Natural change, represented as births minus deaths, was up marginally from 514,277 to 518,858 in 2025. The decline in net international migration and stable natural change led to lower population growth nationally between 2024 and 2025.

Each region in the U.S. experienced population growth over the period. The South led in population growth at 0.9%, followed by the Midwest at 0.4%. Meanwhile, the West grew 0.3%, while the Northeast grew the least at 0.2%.

At the state level, 45 States and the District of Columbia saw a population increase over the year. South Carolina had the highest population percentage growth, at 1.5%. This was followed by Idaho (1.4%) and North Carolina (1.3%). Numerically, Texas experienced the largest population increase, gaining 391,243. This was followed by Florida at 196,980 and North Carolina at 145,907.

Five states and Puerto Rico experienced population declines. The population of Puerto Rico fell by 0.6%, followed by Vermont at 0.3% and Hawaii at 0.1%. The other states that experienced population declines were West Virgina, New Mexico and California

California remained the most populous state with a population of 39,355,309. The next most populous state was Texas at 31,709,821. To round out the top five states by total population, the proceeding highest were Florida (23,462,518), New York (20,002,427), and Pennsylvania (13,059,432).



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House Prices Decline in Local Markets Despite National Growth – Eye On Housing

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Nationally, house prices continued to rise at a modest pace in the third quarter of 2025, as mentioned in our previous quarterly house prices post. However, this national trend masks significant variation across local markets. While many metro areas continued to see house price appreciation, others experienced notable declines following several years of rapid growth.

Since the onset of the COVID-19 pandemic, house prices have surged nationwide. Between the first quarter of 2020 and the third quarter of 2025, national house prices climbed 54.9%. Local markets saw broad gains as well, with cumulative appreciation ranging from 18.3% to 88.4%, and 159 metro areas reached their highest recorded house prices in the third quarter of 2025.

Yet despite these increases, more than half of metro areas have now experienced at least some decline from their recent price peak. These declines range from a slight 0.1% dip to a more substantial 12.7% decline, with most of the downward trends beginning in last 2024 or early 2025.

House price declines have been most widespread in the West and South, regions that saw some of the fastest appreciation during the pandemic boom.  Several markets stand out for their significant corrections:

Punta Gorda, FL has experienced the sharpest decline, with prices falling 12.7% since its peak in the fourth quarter of 2022.

Austin–Round Rock–San Marcos, TX, one of the nation’s hottest markets during the pandemic, has seen prices drop 11.3% since reaching a peak in the second quarter of 2022.

Victoria, TX reached its peak more recently in the fourth quarter of 2024 and has since seen prices decline 11.0% over the past three quarters.

In contrast, many metro areas in the Midwest and Northeast have avoided significant price declines. These regions continue to see slower but steady price growth, supported by persistent inventory shortages and solid demand. Their more moderate appreciation during the pandemic has also helped limit the risk of sharp price corrections. Here are some examples (listed in no particular order):

York–Hanover, PA recorded a 6.0% year-over-year increase in house prices in the third quarter of 2025, reflecting stable demand and limited housing supply.

Worcester, MA continues to experience price growth, slowing from the rapid 18.0% growth in the third quarter of 2021 to a still-solid 4.4% year-over-year gain in the third quarter of 2025.

Wausau, WI experienced a robust 9.5% year-over-year increase in home prices, standing out as one of the strongest and most resilient housing markets in the region.

Milwaukee-Waukesha, WI continue to see rising house prices, with growth easing from a peak of 16.7% growth in the second quarter of 2022 to a more sustainable 5.6% year-over-year increase in the third quarter of 2025.



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Job Growth Slowed as 2025 Ended – Eye On Housing

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Job growth continued to slow at the end of the year, reinforcing signs of a cooling labor market. Nonfarm payrolls increased by 50,000 jobs in December, while the unemployment rate edged down slightly to 4.4%. With only 584,000 jobs added over the course of the year, 2025 marked the weakest annual job growth since 2003, excluding the recession years of 2008, 2009 and 2020. December’s job gains were led by food services, health care and social assistance, while retail trade and construction experienced job losses.

Wage growth accelerated in December, rising 3.8% year over year. This marked a 0.2 percentage point increase from the previous month, though it still remained 0.2 percentage points lower than a year ago. Wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

National Employment

According to Employment Situation Summary reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment rose by 50,000 in December, following a downwardly revised gain of 56,000 jobs in November. Through December, average monthly job growth in 2025 stood at just 49,000, well below the 168,000 monthly average recorded in 2024.

Payroll estimates for the previous two months were revised lower. October’s growth was revised down by 68,000, from -105,000 to -173,000. November job growth was revised down by 8,000, from +64,000 to +56,000. Combined, these revisions erased 76,000 jobs from previously reported figures.

The unemployment rate edged down slightly to 4.4% in December, following a downward revision of 4.5% in November. Over the month, the number of persons unemployed declined by 278,000, while the number of persons employed increased by 232,000.

Meanwhile, the labor force participation rate—the proportion of the population either looking for a job or already holding a job—decreased by 0.1 percentage points to 62.4%. This remains below its pre-pandemic level of 63.3% recorded at the beginning of 2020. Among prime working-age individuals (aged 25 to 54), the participation rate was unchanged at 83.8%, the highest level since September 2024.

Industry-level data further point to a cooling market. Leisure and hospitality added 47,000 jobs in December, while health care and social assistance employment increased by 38,500. In contrast, retail trade and construction posted job losses as well as several other major industries including manufacturing, trasportation and warehousing, and professional and business services, suggesting that hiring softness is broadening across the economy.

Construction Employment

Employment in the overall construction sector declined by 11,000 jobs in December, after a downwardly revised gain of 22,000 in November. Within the industry, residential construction shed 3,100 jobs, while non-residential construction lost 7,800 positions.

Residential construction employment now stands at 3.3 million in December, including 952,000 workers employed by builders and remodelers and approximately 2.4 million residential specialty trade contractors.

The six-month moving average of job gains for residential construction remains negative, at a loss of 3,017 per month, reflecting losses in four of the past six months. Over the last 12 months, residential construction has seen a net loss of 41,400 jobs, marking the eighth consecutive annual decline and the longest stretch of annual losses since the Great Recession. Since the low point following the Great Recession, residential construction has gained 1,336,100 positions.

In December, the unemployment rate for construction workers rose to 5.3% on a seasonally adjusted basis. While higher than in recent months, the rate remains relatively low compared with historical norms.



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Strong Economic Growth for Third Quarter – Eye On Housing

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A belated GDP report shows that the U.S. economy expanded at a strong pace in the third quarter–July through September–before signs of cooling appeared in the labor market and consumer confidence weakened.

According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) expanded at an annual rate of 4.3% in the third quarter of 2025, accelerating from a 3.5% increase in the second quarter. This marks the strongest pace of annual economic growth in the past two years. This growth rate was above the NAHB forecast for the quarter as well.

Furthermore, the latest data from the GDP report indicates that inflationary pressures intensified over the quarter. The GDP price index rose 3.8% for the third quarter, up from a 2.1% increase in the second quarter of 2025. The Personal Consumption Expenditures Price (PCE) Index, which measures inflation (or deflation) across various consumer expenses and reflects changes in consumer behavior, increased 2.8% during the quarter. This is higher than a 2.1% rise in the previous quarter.

This quarter’s increase in real GDP primarily reflected stronger consumer spending, exports, and government spending, which were partially offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased during the quarter as tariffs had measurable effects.

Consumer spending, the backbone of the U.S. economy, rose at an annual rate of 3.5% in the third quarter, its strongest rate since the fourth quarter of 2024. Both goods and services contributed to the gain, with spending on goods rising at a 3.1% annual rate and spending on services increasing 3.7%.

Government spending also added to economic growth, reflecting increases in both state and local government spending (led by higher consumption expenditures) as well as increased federal government spending, driven by defense consumption expenditures. 

Nonresidential fixed investment increased 2.8% in the third quarter. The increases in equipment (+5.4%) and intellectual property products (+5.4%) offset the decrease in structures (-6.3%). Meanwhile, residential fixed investment (RFI) continued to contract, declining 5.1% for the second consecutive quarter. Within the residential category, single-family structures fell 8.9% at an annual rate, multifamily structures declined 2.9%, and spending on home improvements dropped 7.6%.

For the common BEA terms and definitions, please access bea.gov/Help/Glossary.



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Growth for Custom Home Building

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NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates year-over year growth for custom home builders amid broader single-family home building weakness. The custom building market is less sensitive to the interest rate cycle than other forms of home building but is more sensitive to changes in household wealth and stock prices. With spec home building down and the stock market up, custom building is gaining market share.

There were 54,000 total custom building starts during the second quarter of 2025. This was up 4% relative to the second quarter of 2024. Over the last four quarters, custom housing starts totaled 184,000 homes, just more than a 2% increase compared to the prior four quarter total (180,000).

Currently, the market share of custom home building, based on a one-year moving average, is approximately 19% of total single-family starts. This is down from a prior cycle peak of 31.5% set during the second quarter of 2009 and the 21% recent peak rate at the beginning of 2023, after which spec home building gained market share. The current market share is the highest since 2022.

Note that this definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction.

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Residential Building Worker Wage Growth Slows Amid Housing Slowdown

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Both real and nominal wage growth for residential building workers slowed during the second quarter of 2025, reflecting a broader cooling in the construction labor market, according to the latest report from the U.S. Bureau of Labor Statistics (BLS).

In nominal terms, average hourly earnings (AHE) for residential building workers rose to $39.35 in June 2025, a 3.5% increase from $38.02 a year ago. This marks a continued deceleration in the year-over-year wage growth, which peaked at 9.3% in June 2024. The recent slowdown reflects a slowdown in residential construction activity and a decline in labor demand across the sector. Meanwhile, the number of open, and unfilled construction sector jobs has continued to trend downward, in line with the overall slowdown in housing activity.

Despite the slowdown in wage growth, residential building workers’ wages remain competitive:

11.4% higher than the manufacturing sector ($35.32/hour)

25.3% higher than the transportation and warehousing sector ($31.4/hour)

2.3% lower than the mining and logging sector ($40.29/hour)

Note:

Data used in this post relate to all employees in the residential building industry. This group includes both new single-family housing construction (excluding for-sale builders) and residential remodelers but does not include specialty trade contractors.

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Solid Job Growth in June

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The U.S. labor market continued to show resilience in June, with steady job gains led by state/local government and health care sectors. The unemployment rate edged down to 4.1%, signaling ongoing strength in hiring despite persistent economic uncertainty. However, there were some indications that the headline number overstated the health of the labor market, including slowing wage growth and much of the job gains concentrated in state/local government.

In June, wage growth slowed. Year-over-year, wages grew at a 3.7% rate, down 0.1 percentage point from the previous month. Wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

National Employment

According to the Employment Situation Summary reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment rose by 147,000 in June, following an upwardly revised increase of 144,000 jobs in May. Since January 2021, the U.S. job market has seen 54 consecutive months of job growth, making the third-longest period of employment expansion on record. In 2025, monthly employment growth has averaged 124,000, compared with the 168,000 monthly average gain for 2024.

The estimates for the previous two months were revised upward. The monthly change in total nonfarm payroll employment for April was revised up by 11,000 from +147,000 to +158,000, while the change for May was revised up by 30,000 from +139,000 to +144,000. Combined, the revisions were 16,000 higher than previously reported.

The unemployment rate declined to 4.1% in June. The June decrease in the unemployment rate reflected the decrease in the number of persons unemployed (-222,000) and the increase in the number of persons employed (93,000).

Meanwhile, the labor force participation rate—the proportion of the population either looking for a job or already holding a job—decreased by one percentage point to 62.3%. This remains below its pre-pandemic level of 63.3% recorded at the beginning of 2020. Among individuals aged 25 to 54, the participation rate rose by one percentage point to 83.5%. However, the rate for the prime working-age group (25 to 54) has been trending downward since reaching a peak of 83.9% last summer.

In June, job gains occurred in state/local government and health care. State/local government posted a large 80,000 combined net job gain for June, while the health care sector added 39,000 jobs, with the largest increases occurring in hospitals and in nursing and residential care facilities. In contrast, the federal government continued to experience job losses, shedding 7,000 positions in June and a total of 69,000 since January 2025, reflecting the effects of government cutbacks. The BLS notes that “employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey.”

Construction Employment

Employment in the overall construction sector rose by 15,000 in June, following an upwardly revised gain of 6,000 in May. While residential construction gained 5,500 jobs, non-residential construction employment added 9,200 jobs during the month.

Residential construction employment now stands at 3.3 million in June, broken down as 959,000 builders and 2.4 million residential specialty trade contractors. The six-month moving average of job gains for residential construction was -1,833 a month, reflecting the three months of job losses recorded over the past six months, specifically in January, March, and May of 2025. Over the last 12 months, home builders and remodelers experienced a net loss of 1,400 jobs, marking the second annual decline since September 2020. Since the low point following the Great Recession, residential construction has gained 1,360,600 positions.

In June, the unemployment rate for construction workers declined to 3.5% on a seasonally adjusted basis. The unemployment rate for construction workers has remained at a relatively lower level, after reaching 15.3% in April 2020 due to the housing demand impact of the COVID-19 pandemic.

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HBGI Q1 2025: Multifamily Growth in Smaller Markets

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Single-family construction growth slowed substantially across all markets in the first quarter of 2025, according to the Home Building Geography Index (HBGI).  Multifamily construction growth remained negative in the largest markets but reported significant expansion in lower population density areas. The HBGI tracks single-family and multifamily permits across seven population density delineated geographies in the United States.  

Single-Family

Among the HBGI geographies, the highest growth in the first quarter of 2025 was registered in small metro core counties, which increased 3.2% year-over-year on a four-quarter moving average basis (4QMA). The market with the largest decline in growth between the fourth quarter and first quarter was large metro core counties, which saw its four-quarter moving average growth rate fall from 9.4% to 1.3% (-8.1 pp). Two geographies, large metro outlying areas and non metro/micro counties, reported declines in the first quarter, down 0.2% and 0.4% respectively.

In terms of market share, single-family construction took place primarily in small metro core county areas, representing 29.2% of single-family construction. The smallest single-family construction market remained non metro/micro county areas, with a 4.2% market share. Single-family construction market share have been stable since the first quarter of 2024, with the largest gain being 0.4 percentage points in small metro core counties over the year.  

Multifamily

Multifamily construction expanded 33.2% in large metro outlying areas in the first quarter, the highest growth (4QMA) since the second quarter of 2022 when this geography grew 71.8%. Growth was present in three other geographies, with micro counties up 29.3%, small metro outlying counties up 18.5%, and non metro/micro counties up 3.7%.

Because of the notable increase in multifamily construction occurring in smaller markets, market shares have shifted over the past two years. Large metro core counties, where a plurality of construction takes place, saw a 4.8 percentage point drop in market share between Q1 of 2024 and 2025. The largest construction gains have been in low population density areas, with the combined market share for small metro outlying counites, micro counties and non metro/micro counties growing 2.2 percentage points from 7.8% to 10.0% between Q1 2024 and 2025.

The first quarter of 2025 HBGI data along with an interactive HBGI map can be found at http://nahb.org/hbgi.

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Building Material Price Growth Minimal in April

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Prices for inputs to new residential construction—excluding capital investment, labor, and imports—fell 0.4% in April, following a (revised) increase of 0.8% in March. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics. The PPI measures prices that domestic producers receive for their goods and services; this differs from the Consumer Price Index which measures what consumers pay and includes both domestic products as well as imports.

The inputs to the New Residential Construction Price Index grew 0.6% from April of last year. The index can be broken into two components­—the goods component also increased 0.6% over the year, with services increasing 0.6% as well. For comparison, the total final demand index, which measures all goods and services across the economy, increased 2.4% over the year, with final demand with respect to goods up 0.5% and final demand for services up 3.3% over the year.

Input Goods Prices

The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. For the month, the price of input goods to new residential construction was down 0.2% in April.

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.

Energy input prices were up 0.1% between March and April but were 17.6% lower than one year ago. Building material prices were down 0.3% between March and April but up 2.2% compared to one year ago. Energy costs have continued to fall on a year-over-year basis, as this marks the ninth consecutive month of lower input energy costs.

Input Services Prices

Prices for service inputs to residential construction reported its first monthly decline in five months, down 0.6% in April. On a year-over-year basis, service input prices are up 0.6%.

The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component (other services). The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 0.2% from a year ago. The other services component was up 1.4% over the year. Lastly, prices for transportation and warehousing services advanced 0.6% compared to April last year.

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