Construction material prices climbed 0.7% in January and are up 2.3% on a year-over-year basis, according to Associated Builders and Contractors. Prices in January were 43.5% higher than in February 2020.
Nonresidential construction material prices rose 0.6% in January and increased 2.9% compared with one year ago. Softwood lumber prices are down 2.8% year over year and up 3.9% for the month. Iron and steel prices are up 15.5% year over year and 2.2% for the month. Natural gas fell 2.9% in January and is down 3.9% year over year. Crude petroleum rose 1.8% for the month and is down 22.3% year over year.
“Nonresidential construction input prices rebounded in January, surging at a blistering 7.1% annualized rate for the month,” said ABC Chief Economist Anirban Basu. “While this sharp monthly rise can be traced to significant increases in prices for tariff-affected products like copper wire and cable, iron and steel, and industrial controls equipment, aggregate input price escalation is not particularly concerning right now. Nonresidential materials prices are up just 2.9% over the past year and have been virtually flat over the past several months, rising just 0.2% since September despite some large monthly fluctuations.
“Trade policy may continue to put upward pressure on certain input prices, especially those subject to the large Section 232 tariffs,” Basu continued. “Even so, input escalation is unlikely to rise too sharply as long as energy prices remain tame and demand remains subdued. Contractor sentiment seems to reflect this; optimism regarding profit margins improved in January, according to ABC’s Construction Confidence Index, although it remains lower than one year ago.”
