Construction material prices climbed 0.2% in May and are up 1.3% on a year-over-year basis, according to Associated Builders and Contractors. Prices in May were 41.8% higher than in February 2020.
Nonresidential construction material prices rose 0.3% from April to May and increased 1.6% compared with one year ago. Softwood lumber prices are up 9.1% year over year and down 3.2% from April to May. Iron and steel prices are up 5% year over year and up 3.2% for the month. Natural gas fell 18.7% from April to May and is up 48.9% year over year. Crude petroleum rose 1.3% for the month and is down 16.8% year over year.
“Construction materials prices continued to increase at a faster-than-ideal pace in May,” said ABC Chief Economist Anirban Basu. “While input prices are up just 1.3% over the past year, that modest escalation is entirely due to price decreases during the second half of 2024. Costs have increased rapidly since the start of this year, with input prices rising at a 6% annualized rate through the first five months of 2025.
“Accelerating input price escalation is largely due to rapid price increases for tariff-affected goods like iron and steel,” Basu continued. “Expect this dynamic to remain over the next few quarters; these data predate tariffs on iron and steel rising from 25% to 50%, which went into effect June 4. Despite rising input prices, contractors remain relatively optimistic about their profit margins, according to ABC’s Construction Confidence Index. With cooler-than-expected economywide inflation in May, the number of expected rate cuts in 2025 has risen. If those expectations are realized, it would provide the construction industry with a much-needed tailwind.”
