If trends hold, the December-to-January rise will be the largest of all 12 months, as it was in both 2023 and 2022 when they leaped 1.07% and 4.05% respectively. The index is not seasonally adjusted. 

Price gains were driven by gypsum materials, ready-mix concrete and steel mill products, while softwood lumber costs declined for the seventh month in a row. Seasonally adjusted lumber prices fell 2.98% in February and are 10.35% lower year over year.

The drop in lumber prices likely reflect typical seasonal demand. "Prices for lumber will likely start to creep upwards as single-family home construction enters the spring season and demand for lumber increases," NAHB researchers wrote in its analysis.

On the other hand, gypsum materials headed higher for the first time in 11 months, accelerating a nonadjusted 2.95% from January. But after the prolonged period of lower costs, gypsum prices finished February lower by 0.18% on a year-over-year basis. 

Steel-mill products took a similar-sized 2.86% jump, higher for the third month in a row. Compared to 12 months ago, the cost of steel goods for residential building was up 5%.

Ready-mix concrete inched up an adjusted 0.25% in February, after rising 1.76% a month earlier. Prices finished 7.42% higher from a year earlier. 

The latest data comes after single-family residential construction starts slowed by its greatest pace since 2020 to start the year. But new-home construction is also coming off a 12-month period of elevated consumer interest and improved builder sentiment, as aspiring buyers increasingly turned to the market in the absence of existing inventory. The growth in demand has translated into profits for many of the largest homebuilders.

The Producer Price Index for final-demand goods, including food and energy, rose overall by 1.2% on a monthly basis after it edged down 0.12% a month earlier.