The price of materials and services used in nonresidential construction continued rising at a double-digit rate in November from a year earlier. Prices are propelled by outsized increases in the cost of a variety of building materials, according to an analysis by the Associated General Contractors of America of Bureau of Census pricing data. Association officials noted that contractors are having to pay more both for materials and for the subcontractor services they need to finish most projects.
“Although inflationary pressures are cooling in some areas, overall costs for construction are still rising at painfully high rates,” said Ken Simonson, the association’s chief economist, in the press release. “In addition, subcontractors are reacting to higher materials and labor costs by raising their prices.”
The producer price index for inputs to nonresidential construction — the prices charged by goods producers and service providers such as distributors and transportation firms— rose +10.1% since Nov. 2021 despite decreasing -0.4% from October to November. The year-over-year rise outpaced the +7.4% increase in the overall producer price index for finished goods, the economist noted.
Prices of numerous widely used goods posted double-digit increases over the past 12 months. The producer price index for diesel fuel leaped by +59.6% despite a one-month decline of -3.4% in November. The index for paint and other architectural coatings rose +26.3% over 12 months. There were also increases of more than +10% annually in the price indexes for gypsum products such as wallboard (+18%); insulation products (+14.3%); asphalt and tar roofing materials (+12.5%); flat glass (+12.3%); plastic construction products (+11.3%); and truck transportation of freight (+11.1%).
Subcontractors’ prices for new, repair and maintenance work also increased sharply in the latest 12 months. Prices rose by +13.8% for electrical contractors. Association officials said construction prices were likely to continue to increase while contractors are paying more for materials and subcontractor services. They urged public officials and private sector developers to factor in higher construction costs when planning for new construction projects to avoid having few or no bids for projects.