ASA Market Watch

According to the latest Producer Price Index report from National Association of Home Builders (NAHB.org), growth in the average price level of inputs to residential construction less energy (i.e., building materials) fell from 15% in 2022 to 1.3% in 2023. On a monthly basis, building materials prices rose 0.1% in December after increasing 0.1% in November. Monthly price increases averaged 0.2% in 2023, down from 1.5% in 2021 and 0.7% in 2022.

NAHB reports softwood lumber declined 203%, which is the third consecutive decrease in the past five months. Steel mill products prices climbed 3.3% in December, the first increase since May. Steel mill products annual average prices declined 16.1% in 2023 after increasing 8.7% in 2022 and the historic 90.3% increase of 2021.

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Housing Starts on the Upswing
Lower mortgage rates and recent Fed messaging have boosted builder confidence, likely contributing to strong housing starts in November, ITR Economics reports.  Weak consumer finances and lingering affordability constraints are expected to rise, and according to ITR, the starts 12MMT will generally rise through at least year-end 2026, with a potential flat period around the end of 2024.

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Residential HVAC Sales Slide
From Cleveland Research, residential HVAC sales in its 4Q survey declined 2% y/y, slowing 1% from the mid-quarter check and finishing below channel expectations for low-single-digit growth.

Competition across distribution and contractors appeared to have picked up in 4Q with price/mix benefit moderating to 6.5% vs. 9% in 3Q, Cleveland Research reports. Distributor gross margins declined at a similar rate of decline in 3Q. Lastly, inventory feedback is cautious, given worse than expected sell-through with distributors accelerating de-stocking efforts and some expecting de-stocking headwinds to persist throughout 1Q, longer than previously expected, the research firm noted.
 

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By Bri Baresel
Manager of Data and Market Intelligence
bbaresel@asa.net