Construction material prices rose 3.5% in January and are up 23.6% on a year-over-year basis, according to www.abc.org.
Nonresidential construction material prices rose 3.1% from December 2021 to January and increased 24.3% compared with one year ago. Softwood lumber prices are up 20.1% year-over-year and 24.4% from December 2021 to January. Iron and steel prices are up 67.8% year-over-year and down 2.9% for the month.
“While many economists expect inflation to moderate over the course of 2022, as of now, there is effectively no relief in sight for the nation’s contractors,” said ABC Chief Economist Anirban Basu. “Inflation remains hot, hot, hot, with estimates of price increases repeatedly coming in above consensus expectations. There was a chunky increase in materials prices in January despite lower natural gas prices. There was also a bit of price relief in metals like iron and steel. But that was more than offset by categories registering price increases, including softwood lumber, plumbing fixtures, concrete and crude petroleum.
“It may seem naive given current data readings, but the expectation remains that, at some point later this year, construction materials prices will moderate.” Basu continued. “As the pandemic fades, supply chains will become more orderly. There are already indications that shipping costs are headed lower, and contractors remain optimistic, according to ABC’s Construction Confidence Index. Undoubtedly, some project owners will choose to postpone start dates in the hope of securing lower bids during the months ahead. The question is how many months they will need to wait.”