The price of materials and services used in nonresidential construction rose at a double-digit rate in November from a year earlier, propelled by outsized increases in the cost of various building materials, according to an analysis of Bureau of Labor Statistics data by the Arlington, Virginia-based Associated General Contractors of America (AGC).
Contractors are having to pay more both for materials and the subcontractor services they need to finish most projects, says the AGC.
“Although inflationary pressures are cooling in some areas, overall costs for construction are still rising at painfully high rates,” AGC Chief Economist Ken Simonson says. “In addition, subcontractors are reacting to higher material and labor costs by raising their prices.”
The producer price index for inputs to nonresidential construction—the prices charged by goods producers and service providers such as distributors and transportation firms—rose 10.1 percent since November 2021 despite decreasing 0.4 percent from October to November. The year-over-year rise outpaced the 7.4 percent increase in the overall producer price index for finished goods, Simonson adds.
Association officials say construction prices are likely to continue to increase while contractors are paying more for materials and subcontractor services. They urge public officials and private sector developers to factor in higher construction costs when planning new construction projects to avoid having few or no bids for projects.
“Christmas trees aren’t the only thing getting more expensive this year,” AGC Executive Director Stephen E. Sandherr says. “Construction prices will continue to increase until prices come down a bit more for key materials and services.”
Prices of numerous widely used goods posted double-digit increases during the past 12 months. The producer price index for diesel fuel rose 59.6 percent year-over-year, despite a one-month decline of 3.4 percent from October to November. The index for paint and other architectural coatings rose 26.3 percent over 12 months. There were also increases of more than 10 percent annually in the price indexes for gypsum products such as wallboard (18 percent); insulation products (14.3 percent); asphalt and tar roofing materials (12.5 percent); flat glass (12.3 percent); plastic construction products (11.3 percent); and freight truck transportation (11.1 percent).
Prices for products used in highway and heavy construction also increased at double-digit rates from November 2021 to last month. The index for liquid asphalt, used in paving projects, jumped 19.8 percent while the index for concrete products climbed 14.3 percent.
Subcontractors’ prices for new, repair and maintenance work increased sharply during the past 12 months. The price index for roofing contractors jumped 20.8 percent. Prices rose by 15 percent for work by plumbing contractors, 13.8 percent for electrical contractors and 10.9 percent for concrete contractors rose.
For more information, see this compilation of data presented by the AGC.
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