January sees spike in construction materials costs
Prices for most materials used in construction increased in January, according to data analyzed by the Associated General Contractors of America.
The overall producer price index for construction materials rose 0.6 percent in January, fueled by a 7.4 percent jump in the price of gypsum products; and a 2.4 percent increase for lumber and plywood. Cement prices increased 2 percent, insulation materials went up 1.5 percent, and copper and steel both increased 1.2 percent.
Many contractors were able to pass along the higher prices to customers, said Ken Simonson, the AGC chief economist.
“Although contractors on average were able to raise bid prices in line with materials cost increases, the results varied widely by commodity, building type and specialty trade,”Simonson said. “Several key construction materials, or ‘processed goods,’ experienced substantial price increases that in many cases exceeded what contractors could pass on last month. It will take a few more months to see if these costs increases are sustained—putting a squeeze on contractors’ margins— or a one-time blip.”