The cost of building continues to rise, led by increases in steel mill product prices.
Construction input prices increased 1.5% in October, the highest increase since June, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released on Tuesday. Nonresidential construction input prices increased 1.4% for the month.
Construction input prices are 21.1% higher than in October 2020, while nonresidential construction input prices increased 22.3% over that span. Steel mill product prices have increased 141.6% since October 2020, while iron and steel prices are up 101.5%. Softwood lumber prices, which surged during the pandemic, are now down 19.5% from the same time last year.
“Any notion that the bout of pandemic-induced inflation was simply transitory has gone by the wayside,” said ABC chief economist Anirban Basu. “Inflation continues to endure, particularly in multiple commodity categories that directly impact the cost of delivering construction services in America. These materials price increases are simply mind-boggling, with iron and steel prices up more than 100% over the past year.
“Despite increased vaccination levels, global supply chain disruptions persist,” said Basu. “Contractors should expect elevated prices well into 2022. According to ABC’s most recentConstruction Confidence Index, the average contractor expects profits to decline over the next six months as the combination of high materials prices and an ongoing shortage of workers conspires to put pressure on margins."