Construction material prices increased 0.2% in April and are down 1.1% on a year-over-year basis, according to Associated Builders and Contractors. Although prices fell again year over year, they still are 39.2% higher than in February 2020.
Nonresidential construction material prices rose 0.4% from March to April and decreased 0.8% compared with one year ago. Softwood lumber prices are down 38.9% year over year and 1.2% from March to April. Iron and steel prices are down 14.3% year over year and up 1.6% for the month. Natural gas fell 20.1% from March to April and is up 30.6% since February 2020. Crude petroleum grew 14.2% for the month and is up 65.9% since February 2020.
“Construction input prices were relatively tame in April and were down on an annual basis for the second straight month,” said ABC Chief Economist Anirban Basu. “This PPI release provides some good news for an industry that has dealt with a nearly 40% increase in construction costs since the start of the COVID-19 pandemic. But inflation remains a pressing issue for the industry and the broader economy. The Consumer Price Index, which is more important for monetary policy and broader economic sentiment, was up 4.9% year over year in April, well above the Federal Reserve’s 2% inflation target.
“Despite the annual decline in input costs, contractors’ profit margins are still under pressure,” Basu continued. “Due to higher borrowing and labor costs and the substantial increase in materials prices over much of 2021 and 2022, the proportion of contractors that expect their profit margins will increase over the next two quarters has slipped in recent months, according to ABC’s Construction Confidence Index.”
