Construction material costs soared 20% in one year

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It now costs about 20% more to build a commercial building in the United States than it did a year ago, according to an analysis of government data by a major construction group.

The Associated General Contractors of America analyzed Bureau of Labor Statistics Producer Price Index data to determine that the overall cost of a basket of materials commonly used in nonresidential construction jumped 20.3 % from January 2021 to January 2022. This increase includes a 2.6 percent increase from December 2021 to January 2022, only.

“Unfortunately, there was no respite earlier this year from the spiraling costs contractors experienced in 2021,” AGC Chief Economist Ken Simonson said in a statement. . “They are apparently passing on more of those costs, but will have an ongoing challenge getting timely deliveries and finding enough workers.”

The Producer Price Index data covers several different products, many of which have seen large increases in the money that factories, distributors and trucking companies charge contractors over the past 12 months:

  • Steel products up 112%
  • Plastic construction products up 35%.
  • Diesel fuel up 56.5%.
  • Aluminum plant forms increased by 32.7%.
  • Copper and brass mill forms were up 24.8% year-on-year.
  • “Architectural Coatings” (including paint) up 24.3%.
  • Lumber and plywood up 21.1%.
  • Insulation up 19.2%.
  • Trucking up 18.3%
  • Construction machinery and equipment up 11.4%.

Contractor prices are also up for non-residential work nationwide. Prices for concrete contractors rose 18.8% year-on-year in January, roofing contractors 13.9%, electrical contractors 11.4% and plumbing contractors 9.9%.

One bright spot may be the price of concrete: a separate index released by the Federal Reserve Bank of St. Louis, which also uses producer price index data, shows that the price of ready-mix concrete rose only 4.5% in the Northeast Census Area, which covers New England, New York, New Jersey and Pennsylvania.

“Soaring material prices make it difficult for most companies to take advantage of any increase in demand for new construction projects,” AGC CEO Stephen E. Sandherr said in a statement. “Unabated, these price increases will undermine the economic merits of many development projects and limit the positive impacts of the new infrastructure bill.

So far, however, AGC’s research shows that contractors do not pass on all of these costs to developers and other customers, although the gap between bid prices and input costs reported by AGC has narrowed. significantly reduced since summer 2021.

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