flexiblefullpage -
billboard - default
interstitial1 - interstitial
Currently Reading

Continued increases in construction materials prices starting to drive up price of construction projects

billboard - default
interstitial1 - interstitial
Market Data

Continued increases in construction materials prices starting to drive up price of construction projects

Supply chain and labor woes continue.


By AGC | November 9, 2021
AGC Chart
Courtesy AGC

Rising construction materials prices appear to be starting to drive up the price of construction projects, according to an analysis by the Associated General Contractors of America of government data released today. Association officials noted that despite a big jump in what contractors charge for projects, the rise in materials prices is still much higher.

“After being battered by unprecedented price increases for many materials, contractors are finally passing along more of their costs,” said Ken Simonson, the association’s chief economist. “Meanwhile, supply-chain bottlenecks and labor shortages continue to impede contractors’ ability to finish projects.”

The producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—jumped 7.1% from September to October and 12.6% over the past 12 months. But an index of input prices—the prices that goods producers and service providers such as distributors and transportation firms charged for inputs for nonresidential construction—climbed by an even steeper 21.1% compared to October 2020, including a 1.3% increase since September, Simonson noted.

Many products, as well as trucking services, contributed to the extreme runup in construction costs, Simonson observed. The price index for steel mill products more than doubled, soaring nearly 142% since October 2020. The indexes for both aluminum mill shapes and copper and brass mill shapes jumped more than 37% over 12 months, while the index for plastic construction products rose more than 30%. The index for gypsum products such as wallboard climbed 25% and insulation costs increased 17%. Trucking costs climbed 16.3%. The index for diesel fuel, which contractors buy directly for their own vehicles and off-road equipment and also indirectly through surcharges on deliveries of materials and equipment, doubled over the year.

Association officials urged the Biden administration and Congress to do more to address supply chain backups that are crippling construction firms and the broader economy. These measures include additional tariff relief for key construction materials. They also urged federal officials to explore other options, like waiving hours of service rules so shippers can tackle freight backlogs.

“Supply chain backlogs are clearly one of the biggest threats to the economy recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “Washington officials need to be more aggressive in taking steps to get key materials moving again so construction firms can continue rebuilding the country.”

View producer price index data. View chart of gap between input costs and bid prices. View the association’s Construction Inflation Alert.

Related Stories

Market Data | Nov 22, 2021

Only 16 states and D.C. added construction jobs since the pandemic began

Texas, Wyoming have worst job losses since February 2020, while Utah, South Dakota add the most.

Market Data | Nov 10, 2021

Construction input prices see largest monthly increase since June

Construction input prices are 21.1% higher than in October 2020.

Market Data | Nov 5, 2021

Construction firms add 44,000 jobs in October

Gain occurs even as firms struggle with supply chain challenges.

Market Data | Nov 3, 2021

One-fifth of metro areas lost construction jobs between September 2020 and 2021

Beaumont-Port Arthur, Texas and Sacramento--Roseville--Arden-Arcade Calif. top lists of gainers.

Market Data | Nov 2, 2021

Construction spending slumps in September

A drop in residential work projects adds to ongoing downturn in private and public nonresidential.

Hotel Facilities | Oct 28, 2021

Marriott leads with the largest U.S. hotel construction pipeline at Q3 2021 close

In the third quarter alone, Marriott opened 60 new hotels/7,882 rooms accounting for 30% of all new hotel rooms that opened in the U.S.

Hotel Facilities | Oct 28, 2021

At the end of Q3 2021, Dallas tops the U.S. hotel construction pipeline

The top 25 U.S. markets account for 33% of all pipeline projects and 37% of all rooms in the U.S. hotel construction pipeline.

Market Data | Oct 27, 2021

Only 14 states and D.C. added construction jobs since the pandemic began

Supply problems, lack of infrastructure bill undermine recovery.

Market Data | Oct 26, 2021

U.S. construction pipeline experiences highs and lows in the third quarter

Renovation and conversion pipeline activity remains steady at the end of Q3 ‘21, with conversion projects hitting a cyclical peak, and ending the quarter at 752 projects/79,024 rooms.

Market Data | Oct 19, 2021

Demand for design services continues to increase

The Architecture Billings Index (ABI) score for September was 56.6.

boombox2 -
native1 -

More In Category




halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021

 


Magazine Subscription
Subscribe

Get our Newsletters

Each day, our editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Subscribe

Follow BD+C: