The housing market may be showing early signs of recovery. Unfortunately, construction costs are moving again too.
According to an NAHB analysis of federal producer-price data, residential building material prices rose 0.4% in July and 5% over the past year—the largest annual increase since December 2022.
Lumber delivered the biggest warning.
Softwood lumber prices jumped 7.4% in July alone and are now 17.3% higher than a year ago. Energy inputs remain 33.1% above last year, while transportation, warehousing and trade-service costs have also climbed sharply.
The monthly headline looks better: Total inputs to new residential construction declined 0.1%. But that small dip shouldn’t obscure the broader trend. Overall input costs remain 6.5% higher than a year ago.
At the beginning of the year, we advised builders to control costs before committing by locking in prices, securing critical materials early, and treating procurement as a front-end decision.
July’s numbers reinforce that advice. A recovering housing market does not automatically mean a recovery in margins. When costs can change this quickly, waiting for certainty is a decision in itself.
Read more: The One Operational Principle for Builders in 2026
