Construction Viewpoint

Construction Costs Stable as Overall Inflation Rises

In November, construction input prices remained stable, with nonresidential construction input prices rising by just 0.1% month-over-month, according to an analysis by Associated Builders and Contractors (ABC). Overall, prices were up by 0.5% compared to the previous year. Despite the stability, certain materials, such as copper wire and softwood lumber, saw significant price increases, with copper and brass mill shapes rising by 15% and aluminum mill shapes increasing by 7.4%.

The price stabilization was largely attributed to a decline in energy costs, including a 17.3% drop in natural gas prices and an 11.9% decrease in unprocessed energy materials. However, inflation in the broader economy reaccelerated, with the Consumer Price Index increasing by 2.7% for the year. Despite this, contractors remain optimistic about the next six months, with more than 60% expecting sales growth. ABC’s chief economist, Anirban Basu, noted that while overall input prices have been relatively stable, specific materials continue to see price escalation, which could affect construction costs.

In November, construction input prices remained relatively stable, with a slight 0.1% increase in nonresidential construction costs month-over-month. However, certain materials like copper wire and softwood lumber saw notable price hikes, including a 15% rise in copper and brass mill shapes. Energy cost declines, particularly in natural gas and unprocessed energy materials, helped offset these increases. Despite inflationary pressures in the broader economy, contractors are optimistic about future growth, with over 60% expecting sales to rise. ABC’s chief economist, Anirban Basu, emphasized that while overall prices have stabilized, ongoing material price increases may influence future construction costs.

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