Construction Materials Prices Falling - Will It Last?
Prices for key construction materials bought by contractors dropped 0.3% in May from April’s figures. Compared to May 2011, prices are only 2.3% higher, according to the Associated General Contractors of America. Contractors are keeping their prices in line with April’s, with contractors charging only between 3.1% and 4.3% for the year to construct projects.
“The slowdown in construction input price increases is a rare and possibly short-lived event,” said Ken Simonson, the association’s chief economist, noting that the last time prices rose so slowly from a year earlier was February 2010. “Meanwhile, some of the price increases we are seeing for materials like gypsum and lumber reflect a strengthening new residential and commercial remodeling construction.”
Price indexes for key construction materials including diesel fuel, copper and brass mill shapes and aluminum mill products dropped between April and May. However, the indexes for gypsum products and lumber prices both increased month-over-month.
The price indexes for finished nonresidential buildings, which measure what contractors estimate they would charge to put up new structures, mostly inched up for the past month and are now beginning to outpace increases in construction materials prices, Simonson noted. The index for new industrial buildings dropped 0.1% in May while the index for new office construction gained a slight 0.2%. Both the prices for new warehouse construction and new school construction were up for the month.
AGC believes materials prices to remain moderate for a while, which they say is a good time for public and private sector owners to start construction on needed projects.
Source: Associated General Contractors of America