Report: Some materials prices down but supply issues remain

According to the Associated General Contractors of America, there were double-digit percentage increases in the selling prices of most materials used in every type of construction over the last 12 months – with the exclusion of lumber and plywood. Photo: claffra/iStock / Getty Images Plus/Getty Images

The prices contractors pay for construction materials far exceeded the prices contractors charge in the 12 months ending in September, the Associated General Contractors of America (AGC) reports.

This development persists despite a recent price declines in a few materials, AGC says – and all while delivery problems intensified.

AGC, which conducted an analysis of government data to identify this continued trend, urges 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,” says Ken Simonson, AGC’s chief economist. “Meanwhile, supply bottlenecks continue to worsen.”

According to AGC, 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 September 2021, the prices producers and service providers, such as distributors and transportation firms, charged for construction inputs jumped 17 percent, Simonson says.

Specific materials

AGC identified double-digit percentage increases in the selling prices of most materials used in every type of construction over the past 12 months, with the exception of lumber and plywood, which fell 12.3 percent.

The producer price index for steel mill products increased by 134 percent compared to September 2020, AGC says. 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, jumped as well.