Building material prices continue to exceed 12-month bid prices, despite falling in September, amid growing supply chain issues
Construction officials renew pressure for immediate removal of tariffs on major building materials, urge Congress and administration to take action to fix “all levels” of supply chain
The prices contractors pay for building materials far exceeded the prices charged by contractors in the 12 months ending in September, despite a recent drop in the prices of a few materials, as delivery problems intensified, according to a analysis by Associated General Contractors of America from government data released today. Association officials have urged Washington officials to end tariffs on major building materials and take action to help unravel booming supply points.
“The costs of building materials remain out of control despite a drop in some inputs last month,” said Ken Simonson, chief economist of the association. âMeanwhile, supply bottlenecks continue to worsen.
The producer price index for new non-residential construction – a measure of what contractors say they would charge to erect five types of non-residential buildings – has risen 5.2% in the past 12 months, despite a 0.9% drop last month. From September 2020 to last month, prices charged by producers and service providers such as distributors and transport companies for construction inputs jumped 17%, Simonson noted.
There were double-digit percentage increases in the selling prices of most materials used in all types of construction, excluding lumber and plywood, which fell 12.3% over the year. over the past 12 months.
The producer price index for steel products rose 134 percent from last September. The index of copper and brass rolling mill shapes increased by 39.5% and the index of aluminum rolling mill shapes increased by 35.1%. The index of plastic construction products rose 29.5%. The index for gypsum products such as wall panels climbed 23%. The insulation materials index increased 19%, while the prepared asphalt and tar roofing and siding products index increased 13.1%.
In addition to increases in material costs, transportation and fuel costs have also skyrocketed. The road freight transport index jumped 15 percent. Fuel costs, which contractors pay directly to operate their own trucks and off-road equipment, as well as surcharges on freight deliveries, have also jumped.
Association officials added that many contractors experience extreme delays or uncertainty over delivery dates for receiving shipments of many types of building materials. Association officials have urged the Biden administration to immediately end tariffs on major building materials. In addition, they called for a total effort to help ports and freight companies move goods faster.
âTariffs on lumber, steel, aluminum and many building components have added fuel to already overheated prices,â said Stephen E. Sandherr, chief executive of the association. “Ending tariffs would help immediately, while other steps should be taken to ease supply chain bottlenecks.”