Construction material prices are 20.8% higher than a year ago

September 15, 2021

An Associated Builders and Contractors analysis of information provided by the Bureau of Labor Statistics shows construction material prices fell 0.6% from July to August, according to www.abc.org. On a year-over-year basis, the price of construction materials increased 20.8%.

Nonresidential construction material prices fell 0.4% from July to August and increased 21.6% compared with one year ago. Softwood lumber prices are down 9.8% year-over-year and down 27.3% from July to August. Iron and steel prices are up 95.2% year-over-year and 2.9% for the month.

ABC Chief Economist Anirban Basu said although the small overall decline in materials prices was driven by declines for softwood lumber and crude petroleum, they were the exceptions. Categories that registered monthly price increases of 3% or more included prepared asphalt, steel mill products, natural gas and fabricated structural metal products.

“Some of the recent setbacks in global supply chain recovery relate to the dislocating impacts of the delta variant, but there are other forces at work, including government policy and geopolitics,” Basu said. “As a growing number of nations around the world increase vaccination rates, the global economic recovery should continue. That will put even more upward pressure on input prices, all things remaining equal. Passage of a meaningful American infrastructure plan would further catalyze price increases.

“Hopefully, currently elevated prices will induce suppliers to increase output in the short term and capacity over the longer term,” Basu continued. “While supply chain disruptions, input shortages and high prices, which many contractors mentioned as factors affecting their backlog—according to ABC’s Construction Backlog Indicator—are likely to persist into 2022, the laws of economics suggest that project owners and the contractors who work on their behalf will benefit from some price relief at some point next year.”

Tags: Trends

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