An Associated Builders and Contractors analysis of information provided by the Bureau of Labor Statistics shows construction material prices held steady from September to October, according to www.abc.org. On a year-over-year basis, the price of construction materials increased 1.1%.
Nonresidential construction material prices held steady from September to October and increased 0.5% compared with one year ago. The higher increase in overall construction materials prices is largely attributable to softwood lumber prices, which are up nearly 69% year-over-year.
“While contractors will face significant challenges during the months ahead, substantial increases in construction materials prices are likely not among them,” said ABC Chief Economist Anirban Basu. “Oil prices have been rising in recent months, but global supply-demand dynamics suggest that material prices will only rise modestly over the coming months. Declining prices are possible in many input categories.
“This has everything to do with COVID-19,” Basu continued. “Economic lockdowns are becoming more pervasive in much of the advanced world as winter approaches. With infection rates and hospitalizations spiking in much of the northern hemisphere, including in both Europe and the United States, the economic recovery that began in the second quarter will likely be interrupted. That will translate into diminished demand for many global commodities, putting downward pressure on prices.”
Basu said the COVID-19 pandemic also affects and disrupts supply chains.
“Not only would shortages of certain commodities limit price declines, it sets the stage for depleted inventories once economic recovery recommences,” Basu said. “If there is a post-inauguration stimulus with a significant infrastructure component and the dissemination of a vaccine at some point next year, the conditions for sizeable increases in input prices would be in place. Accordingly, rapid increases in materials prices are not likely in the near-term but could surface in the latter parts of 2021.”