Construction material prices rose 0.6% in December 2021 and are up 22.3% on a year-over-year basis, according to www.abc.org.
Nonresidential construction material prices rose 0.6% from November 2021 to December 2021 and increased 23.2% compared with one year ago. Softwood lumber prices are up 12.6% year-over-year and up 23.6% from November 2021 to December 2021. Iron and steel prices are up 87.2% year-over-year and down 0.2% for the month.
ABC Chief Economist Anirban Basu said materials prices generally continue to increase despite Federal Reserve officials and many others predicting a year ago that inflationary pressures would have eased by now.
“Much attention has been devoted to global supply chain disruptions,” Basu said. “Thanks to the Omicron variant, those disruptions will persist through the first quarter of 2022. That translates into additional upward pressure on construction materials prices, something that estimators must consider as they submit bids for future work. Among the other implications of materials price increases is the redesign of projects to substitute for expensive inputs, such as steel. Not only does this put pressure on architects and engineers to identify alternative designs and materials, but it also means that contractors may end up working with inputs with which they are less familiar.
“ABC continues to forecast that, at some point later this year, materials prices will begin to normalize,” Basu continued. “The expectation remains that global supply chain disruptions will steadily fade as 2023 approaches as will the demand shock associated with economic reopening. The Federal Reserve has pivoted to a regime emphasizing inflation containment, which will also help to suppress inflationary pressures at some point in 2022. For these and other reasons, confidence among ABC members has continued to inch upward, according to ABC’s Construction Confidence Index.”