The prices contractors pay for construction materials far outstripped the prices contractors charge in the 12 months ending in September, despite a recent decline in a few materials prices, while delivery problems intensified, according to an analysis by the Associated General Contractors of America of government data released today. Association officials urged Washington officials to end tariffs on key construction materials and take steps to help unknot snarled supply points.
“Construction materials costs remain out of control despite a decline in some inputs last month,” said Ken Simonson, the association’s chief economist. “Meanwhile, supply bottlenecks continue to worsen.”
The producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose 5.2% over the past 12 months, despite a decline of 0.9% in the latest month. From September 2020 to last month, the prices that producers and service providers such as distributors and transportation firms charged for construction inputs jumped 17%, Simonson noted.
There were double-digit percentage increases in the selling prices of most materials used in every type of construction with the exclusion of lumber and plywood, which fell 12.3% during the past 12 months.
The producer price index for steel mill products increased by 134% compared to last September. The index for copper and brass mill shapes rose 39.5% and the index for aluminum mill shapes increased 35.1%. The index for plastic construction products rose 29.5%. The index for gypsum products such as wallboard climbed 23%. The index for insulation materials rose 19%, while the index for prepared asphalt and tar roofing and siding products rose 13.1%.
In addition to increases in materials costs, transportation and fuel costs also spiked. The index for truck transportation of freight jumped 15%. Fuel costs, which contractors pay directly to operate their own trucks and off-road equipment, as well as through surcharges on freight deliveries, have also jumped.
Association officials added that many contractors are experiencing extreme delays or uncertainty about delivery dates for receiving shipments of many types of construction materials. The association officials urged the Biden administration to immediately end tariffs on key construction materials. In addition, they asked for an all-out effort to help ports and freight transportation businesses move goods more quickly
“The tariffs on lumber, steel, aluminum, and many construction components have added fuel to already overheated prices,” said Stephen E. Sandherr, the association’s chief executive officer. “Ending the tariffs would help immediately, while other steps should be taken to relieve supply-chain bottlenecks.”
View producer price index data. View chart of gap between input costs and bid prices. View the association’s Construction Inflation Alert.
Related Stories
Contractors | Jun 12, 2024
The average U.S. contractor has 8.3 months worth of construction work in the pipeline, as of May 2024
Associated Builders and Contractors reported that its Construction Backlog Indicator fell to 8.3 months in May, according to an ABC member survey conducted May 20 to June 4. The reading is down 0.6 months from May 2023.
MFPRO+ News | Jun 11, 2024
Rents rise in multifamily housing for May 2024
Multifamily rents rose for the fourth month in a row, according to the May 2024 National Multifamily Report. Up 0.6% year-over-year, the average U.S. asking rent increased by $6 in May, up to $1,733.
Construction Costs | May 16, 2024
New download: BD+C's May 2024 Market Intelligence Report
Building Design+Construction's monthly Market Intelligence Report offers a snapshot of the health of the U.S. building construction industry, including the commercial, multifamily, institutional, and industrial building sectors. This report tracks the latest metrics related to construction spending, demand for design services, contractor backlogs, and material price trends.
Contractors | May 15, 2024
The average U.S. contractor has 8.4 months worth of construction work in the pipeline, as of April 2024
Associated Builders and Contractors reported that its Construction Backlog Indicator increased to 8.4 months in April, according to an ABC member survey conducted April 22 to May 6. The reading is down 0.5 months from April 2023, but expanded 0.2 months from the prior month.
Healthcare Facilities | May 6, 2024
Hospital construction costs for 2024
Data from Gordian breaks down the average cost per square foot for a three-story hospital across 10 U.S. cities.
Contractors | May 1, 2024
Nonresidential construction spending rises 0.2% in March 2024 to $1.19 trillion
National nonresidential construction spending increased 0.2% in March, 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 $1.19 trillion.
AEC Tech | Apr 30, 2024
Lack of organizational readiness is biggest hurdle to artificial intelligence adoption
Managers of companies in the industrial sector, including construction, have bought the hype of artificial intelligence (AI) as a transformative technology, but their organizations are not ready to realize its promise, according to research from IFS, a global cloud enterprise software company. An IFS survey of 1,700 senior decision-makers found that 84% of executives anticipate massive organizational benefits from AI.
Hotel Facilities | Apr 24, 2024
The U.S. hotel construction market sees record highs in the first quarter of 2024
As seen in the Q1 2024 U.S. Hotel Construction Pipeline Trend Report from Lodging Econometrics (LE), at the end of the first quarter, there are 6,065 projects with 702,990 rooms in the pipeline. This new all-time high represents a 9% year-over-year (YOY) increase in projects and a 7% YOY increase in rooms compared to last year.
Construction Costs | Apr 18, 2024
New download: BD+C's April 2024 Market Intelligence Report
Building Design+Construction's monthly Market Intelligence Report offers a snapshot of the health of the U.S. building construction industry, including the commercial, multifamily, institutional, and industrial building sectors. This report tracks the latest metrics related to construction spending, demand for design services, contractor backlogs, and material price trends.
Market Data | Apr 16, 2024
The average U.S. contractor has 8.2 months worth of construction work in the pipeline, as of March 2024
Associated Builders and Contractors reported today that its Construction Backlog Indicator increased to 8.2 months in March from 8.1 months in February, according to an ABC member survey conducted March 20 to April 3. The reading is down 0.5 months from March 2023.