Prices for Construction Materials Continue to Outstrip Bid Prices Over 12 Months

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 October 14.

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 percent over the past 12 months, despite a decline of 0.9 percent 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 percent, Ken Simonson, the association’s chief economist 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 percent during the past 12 months.

The producer price index for steel mill products increased by 134 percent compared to last September. The index for copper and brass mill shapes rose 39.5 percent and the index for aluminum mill shapes increased 35.1 percent. The index for plastic construction products rose 29.5 percent. The index for gypsum products such as wallboard climbed 23 percent. The index for insulation materials rose 19 percent, while the index for prepared asphalt and tar roofing and siding products rose 13.1 percent.

In addition to increases in materials costs, transportation and fuel costs also spiked. The index for truck transportation of freight jumped 15 percent. 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.

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