Construction material prices fell 0.9% in May and are up 2.1% on a year-over-year basis, according to Associated Builders and Contractors. Prices in May were 41% higher than in February 2020.
Nonresidential construction material prices fell 0.8% from April to May and increased 2.2% compared with one year ago. Softwood lumber prices are down 8.1% year over year and 3.6% from April to May. Iron and steel prices are down 11.7% year over year and 0.1% for the month. Natural gas rose 1.7% from April to May and is down 22.5% year over year. Crude petroleum fell 8.7% for the month and is up 7.6% year over year.
“For contractors, this data provides excellent news along two fronts,” said ABC Chief Economist Anirban Basu. “First, construction input prices fell for the first time since December and, despite rising somewhat sharply over the first four months of 2024, are up just 2.1% year over year. Second, the Producer Price Index’s economywide measure of final demand prices fell in May. This, along with yesterday’s cooler than expected Consumer Price Index data, signals slowing inflation and that the Federal Reserve may begin to cut rates sooner than expected. With contractor confidence regarding profit margins at the lowest level in seven months according to ABC's Construction Confidence Index, falling materials prices and the prospect of lower interest rates in 2024 are welcome developments for the construction industry.”
