Construction material prices climbed 1.4% in January and are up 1.3% on a year-over-year basis, according to Associated Builders and Contractors. Prices in January were 40.5% higher than in February 2020.
Nonresidential construction material prices rose 0.9% from December 2024 to January and increased 0.7% compared with one year ago. Softwood lumber prices are up 9.5% year over year and down 1.8% from December 2024 to January. Iron and steel prices are down 13.6% year over year and up 1.2% for the month. Natural gas rose 13.7% from December 2024 to January and 21.3% year over year. Crude petroleum rose 14.8% for the month and is up 8.4% year over year.
“Materials prices increased at the fastest monthly pace in two years in January,” said ABC Chief Economist Anirban Basu. “This rapid escalation is largely due to three factors. First, energy prices rose sharply. Second, producers often raise their prices at the start of the year. And third, many purchasers rushed to buy inputs before potential tariffs could go into effect, and that surge in demand pushed prices higher.
“Of these three factors, tariffs are the only one that could continue to push input prices higher in the coming months,” Basu continued. “Import taxes allow domestic producers to raise their prices, and the new 25% levies on steel and aluminum will result in just that if they remain in place. A strong majority of contractors expect their sales to increase over the next six months, according to ABC’s Construction Confidence Index, and the combination of increased demand for construction inputs and ongoing supply chain confusion suggests input price escalation could accelerate through the first half of 2025.”
