Construction material prices held steady in June and are down 4.9% on a year-over-year basis, according to Associated Builders and Contractors. Although prices fell again year over year, they still are 38.3% higher than in February 2020.
Nonresidential construction material prices were unchanged from May to June and decreased 4.5% compared with one year ago. Softwood lumber prices are down 20.8% year-over-year and 1.3% from May to June. Iron and steel prices are down 16.2% year-over-year and 2.5% for the month. Natural gas fell 5.3% from May to June and is up 23% since February 2020. Crude petroleum fell 5.9% for the month and is up 37.7% since February 2020.
“The pandemic-induced period of rapid construction input cost increases is over,” said ABC Chief Economist Anirban Basu. “Today’s Producer Price Index data, along with yesterday’s Consumer Price Index release, show that inflation has slowed, at least with regard to goods prices. This recent moderation is partially due to a drastic improvement in supply chains; both international and domestic freight rates have plunged back toward pre-pandemic levels.
“Despite this recent cooling, construction input prices are still up more than 38% since the start of the pandemic,” Basu continued. “That’s over twice the increase observed for economywide prices over that span. Contractor confidence declined last month, according to ABC’s Construction Confidence Index, and the combination of expensive materials, high interest rates that are likely to rise again at the Federal Reserve’s July meeting and tight credit conditions will put downward pressure on construction activity over the next few quarters.”
