Prices of construction materials jumped nearly 20% in 2021 despite moderating in December, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said contractors rate materials costs as a top concern for 2022, according to a survey predicting the industry’s outlook for the industry the association released yesterday.
“Costs may not rise as steeply in 2022 as they did last year but they are likely to remain volatile, with unpredictable prices and delivery dates for key materials,” said Ken Simonson, the association’s chief economist. “That volatility can be as hard to cope with as steadily rising prices and lead times.”
In the association’s 2022 Construction Hiring and Business Outlook Survey, material costs were listed as a top concern by 86% of contractors, more than any concern. Availability of materials and supply chain disruptions were the second most frequent concern, listed by 77% of the more than 1000 respondents.
The producer price index for inputs to new nonresidential construction—the prices charged by goods producers and service providers such as distributors and transportation firms—increased by 0.5% in December and 19.6% in 2021 as a whole. Those gains topped the rise in the index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings, Simonson noted. That index climbed by 0.3% for the month and 12.5% from a year earlier.
Prices moderated for some construction materials in December but still ended the year with large gains, Simonson observed. The price index for steel mill products rose 0.2% in December, its smallest rise in 15 months, but soared 127.2% over 12 months. The index for diesel fuel declined 5.3% for the month but increased 54.9% for the year. The index for aluminum mill shapes slid 4.9% in December but rose 29.8% over 12 months, while the index for copper and brass mill shapes fell 3.3% in December but rose 23.4% over the year.
Some prices accelerated in December. The index for plastic construction products climbed 1.3% for the month and 34.0% over 12 months. The index for lumber and plywood rose 12.7% and 17.6%.
Association officials said rising materials prices threaten to undermine what is otherwise a strong outlook for the construction industry in 2022. They urged the Biden administration to reconsider its plans to double tariffs on Canadian lumber and leave other trade barriers in place that artificially inflate the costs of key construction materials.
“Making lumber and other materials even more expensive will not tame inflation, boost supplies of affordable housing or help the economy grow,” said Stephen E. Sandherr, the association’s chief executive officer. “Instead, the administration should be removing tariffs and beating inflation.”
View producer price index data. View chart of gap between input costs and bid prices. View the 2022 AGC/Sage Construction Hiring and Business Outlook Survey.
Related Stories
Market Data | Mar 7, 2023
AEC employees are staying with firms that invest in their brand
Hinge Marketing’s latest survey explores workers’ reasons for leaving, and offers strategies to keep them in the fold.
Multifamily Housing | Feb 21, 2023
Multifamily housing investors favoring properties in the Sun Belt
Multifamily housing investors are gravitating toward Sun Belt markets with strong job and population growth, according to new research from Yardi Matrix. Despite a sharp second-half slowdown, last year’s nationwide $187 billion transaction volume was the second-highest annual total ever.
Contractors | Feb 14, 2023
The average U.S. contractor has nine months worth of construction work in the pipeline
Associated Builders and Contractors reports today that its Construction Backlog Indicator declined 0.2 months to 9.0 in January, according to an ABC member survey conducted Jan. 20 to Feb. 3. The reading is 1.0 month higher than in January 2022.
Office Buildings | Feb 9, 2023
Post-Covid Manhattan office market rebound gaining momentum
Office workers in Manhattan continue to return to their workplaces in sufficient numbers for many of their employers to maintain or expand their footprint in the city, according to a survey of more than 140 major Manhattan office employers conducted in January by The Partnership for New York City.
Giants 400 | Feb 9, 2023
New Giants 400 download: Get the complete at-a-glance 2022 Giants 400 rankings in Excel
See how your architecture, engineering, or construction firm stacks up against the nation's AEC Giants. For more than 45 years, the editors of Building Design+Construction have surveyed the largest AEC firms in the U.S./Canada to create the annual Giants 400 report. This year, a record 519 firms participated in the Giants 400 report. The final report includes 137 rankings across 25 building sectors and specialty categories.
Multifamily Housing | Feb 7, 2023
Multifamily housing rents flat in January, developers remain optimistic
Multifamily rents were flat in January 2023 as a strong jobs report indicated that fears of a significant economic recession may be overblown. U.S. asking rents averaged $1,701, unchanged from the prior month, according to the latest Yardi Matrix National Multifamily Report.
Market Data | Feb 6, 2023
Nonresidential construction spending dips 0.5% in December 2022
National nonresidential construction spending decreased by 0.5% in December, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $943.5 billion for the month.
Architects | Jan 23, 2023
PSMJ report: The fed’s wrecking ball is hitting the private construction sector
Inflation may be starting to show some signs of cooling, but the Fed isn’t backing down anytime soon and the impact is becoming more noticeable in the architecture, engineering, and construction (A/E/C) space. The overall A/E/C outlook continues a downward trend and this is driven largely by the freefall happening in key private-sector markets.
Hotel Facilities | Jan 23, 2023
U.S. hotel construction pipeline up 14% to close out 2022
At the end of 2022’s fourth quarter, the U.S. construction pipeline was up 14% by projects and 12% by rooms year-over-year, according to Lodging Econometrics.
Products and Materials | Jan 18, 2023
Is inflation easing? Construction input prices drop 2.7% in December 2022
Softwood lumber and steel mill products saw the biggest decline among building construction materials, according to the latest U.S. Bureau of Labor Statistics’ Producer Price Index.