Derrick Dao flags construction PPI sticky

Construction PPI sounds wonky, but the idea is simple. It tracks what producers charge for the stuff that eventually ends up in a building. When Derrick Dao says residential construction PPI looks sticky, he’s pointing at a real problem — the cost pressure feeding homebuilding has not cleanly rolled over. March data still showed residential-construction goods inputs at 335.128, and the next official update doesn’t land until May 13. (fred.stlouisfed.org) ### What is “construction PPI” actually measuring? It is not the final price of a house, and it is not a contractor’s bid. PPI measures prices received by domestic producers in the first commercial transaction. For construction, that means it is closer to a pipeline gauge for materials and trade-sensitive inputs than a read on the all-in cost a buyer sees at closing. That distinction matters because input inflation can stay hot even when finished-home demand is soft. (bls.gov) ### Why are people focused on residential inputs? Because residential building is where material swings hit fastest. The FRED series built from BLS data for net inputs to residential construction goods hit 335.128 in March 2026. That does not tell you every component was rising at once, but it does tell you the overall basket remained historically elevated rather than snapping back. In other words — “sticky” is a fair shorthand. (fred.stlouis([bls.gov)series/WPUIP2311001)) ### Where do lumber and copper come in? They matter because homebuilding eats both in large quantities, but they behave differently. Lumber is the classic framing story. Copper shows up in wire, cable, and electrical systems, so it bleeds into a lot more than just one line item. The copper-wire-and-cable PPI was 535.32 in March 2026, which is a very high level for a material that touches nearly every house. T(fred.stlouisfed.org)inflation headlines look calmer. (fred.stlouisfed.org) ### Are tariffs part of the story? Yes — and probably more than social-media threads make explicit. NAHB says tariffs on building materials raise housing costs because importers usually pass at least part of the cost through. The group says building materials costs are already up 40% since December 2020, and builders in its April 2025 survey estimated recent tariff actions added a typical $10,900 per home. Mor(fred.stlouisfed.org) (nahb.org) ### Is this about China demand too? That part is murkier. China absolutely matters for global commodity pricing, especially metals, but the cleaner evidence here is tariffs and domestic producer-price pressure, not a single China-demand shock. If anything, the current construction-cost story looks like several forces stacking together — trade policy, still-el(nahb.org)a mix, not a single official claim. (nahb.org) ### Why does this hit affordability so hard? Because housing is a margin business. If financing costs stay high and materials stay expensive, somebody eats it — builder margins, project volume, or buyers. Usually buyers lose first. Even if mortgage rates do some of the disinflation work, sticky input costs can keep bids firm and delay any real relief in new-home pricing. (nahb.org) ### So what’s the real takeaway? Dao’s point holds up best as a warning, not a headline. The warning is that residential construction inflation has become supply-side and stubborn. If April data on May 13 shows another firm reading, that “sticky PPI” call will look less like social chatter and more like the baseline problem for 2026 housing. (bls.gov)