Prices of construction materials jumped more than 20% from January 2021 to January 2022, according to an analysis by the Associated General Contractors of America of government data released today. The association recently posted a new edition of its Construction Inflation Alert, a report to inform project owners, officials, and others about the challenges volatile materials costs, supply chain disruptions, and labor shortages posed for construction firms.\
“Unfortunately, there has been no letup early this year in the extreme cost runup that contractors endured in 2021,” said Ken Simonson, the association’s chief economist. “They are apparently passing on more of those costs but will have a continuing challenge in getting timely deliveries and finding enough workers.”
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 2.6% from December to January and 20.3% over the past 12 months. In comparison, the index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—climbed by 3.8% for the month and 16.5% from a year earlier.
A wide range of inputs contributed to the more than 20% jump in the cost index, Simonson noted. The price index for steel mill products soared 112.7% over 12 months despite declining 1.6% in January. The index for plastic construction products climbed 1.8% for the month and 35.0% over 12 months. The index for diesel fuel jumped 5.1% in January and 56.5% for the year. The index for aluminum mill shapes jumped 5.6% in January and 32.7% over 12 months, while the index for copper and brass mill shapes rose 4.1% in January and 24.8% over the year. Architectural coatings such as paint had an unusually large price gain of 9.0% in January and 24.3% over 12 months. The index for lumber and plywood leaped 15.4 for the month and 21.1% year-over-year. Other inputs with double-digit increases for the past 12 months include insulation, 19.2%; trucking, 18.3%; and construction machinery and equipment, 11.4%.
Association officials said construction firms are being squeezed by increases costs for materials and labor shortages. They urged federal officials to take additional steps to address supply chain disruptions and rising materials prices. These include continuing to remove costly tariffs on key construction components.
“Spiking materials prices are making it challenging for most firms to profit from any increases in demand for new construction projects,” said Stephen E. Sandherr, the association’s chief executive officer. “Left unabated, these price increases will undermine the economic case for many development projects and limit the positive impacts of the new infrastructure bill.”
View producer price index data. View chart of gap between input costs and bid prices. View the February 2022 Construction Inflation Alert.
Related Stories
Giants 400 | Aug 22, 2023
2023 Giants 400 Report: Ranking the nation's largest architecture, engineering, and construction firms
A record 552 AEC firms submitted data for BD+C's 2023 Giants 400 Report. The final report includes 137 rankings across 25 building sectors and specialty categories.
Giants 400 | Aug 22, 2023
Top 175 Architecture Firms for 2023
Gensler, HKS, Perkins&Will, Corgan, and Perkins Eastman top the rankings of the nation's largest architecture firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.
Apartments | Aug 22, 2023
Key takeaways from RCLCO's 2023 apartment renter preferences study
Gregg Logan, Managing Director of real estate consulting firm RCLCO, reveals the highlights of RCLCO's new research study, “2023 Rental Consumer Preferences Report.” Logan speaks with BD+C's Robert Cassidy.
Market Data | Aug 18, 2023
Construction soldiers on, despite rising materials and labor costs
Quarterly analyses from Skanska, Mortenson, and Gordian show nonresidential building still subject to materials and labor volatility, and regional disparities.
Apartments | Aug 14, 2023
Yardi Matrix updates near-term multifamily supply forecast
The multifamily housing supply could increase by up to nearly 7% by the end of 2023, states the latest Multifamily Supply Forecast from Yardi Matrix.
Hotel Facilities | Aug 2, 2023
Top 5 markets for hotel construction
According to the United States Construction Pipeline Trend Report by Lodging Econometrics (LE) for Q2 2023, the five markets with the largest hotel construction pipelines are Dallas with a record-high 184 projects/21,501 rooms, Atlanta with 141 projects/17,993 rooms, Phoenix with 119 projects/16,107 rooms, Nashville with 116 projects/15,346 rooms, and Los Angeles with 112 projects/17,797 rooms.
Market Data | Aug 1, 2023
Nonresidential construction spending increases slightly in June
National nonresidential construction spending increased 0.1% in June, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. Spending is up 18% over the past 12 months. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.07 trillion in June.
Hotel Facilities | Jul 27, 2023
U.S. hotel construction pipeline remains steady with 5,572 projects in the works
The hotel construction pipeline grew incrementally in Q2 2023 as developers and franchise companies push through short-term challenges while envisioning long-term prospects, according to Lodging Econometrics.
Hotel Facilities | Jul 26, 2023
Hospitality building construction costs for 2023
Data from Gordian breaks down the average cost per square foot for 15-story hotels, restaurants, fast food restaurants, and movie theaters across 10 U.S. cities: Boston, Chicago, Las Vegas, Los Angeles, Miami, New Orleans, New York, Phoenix, Seattle, and Washington, D.C.
Market Data | Jul 24, 2023
Leading economists call for 2% increase in building construction spending in 2024
Following a 19.7% surge in spending for commercial, institutional, and industrial buildings in 2023, leading construction industry economists expect spending growth to come back to earth in 2024, according to the July 2023 AIA Consensus Construction Forecast Panel.