Prices for Lumber and Plywood Drop Amid Soaring Construction Material Costs
A recent AGC report highlights the rising rates of numerous construction materials costs and the causes behind it. Tariffs and supply chain bottlenecks are cited as leading causes, with construction officials calling for Congress and the Biden administration to enact change.
This has left contractors losing profit as the price they’re paying for construction materials is outstripping the price they’re charging for them. Double-digit price increases are occurring for almost all construction materials, with the exception of lumber and plywood, which fell 12.3 percent.
Here are the producer price index increases for the most affected materials since Sept 2020.
- Steel mill products: 134%
- Copper and brass: 29.5%
- Gypsum products including wallboard: 23%
- Insulation materials: 19%
- Prepared asphalt and tar roofing and siding products: 13.1%
Transportation and fuel costs increased as well, clocking in 15% gains in transportation and freight costs. Contractors driving their own vehicles absorb the increases directly through higher fuel costs and freight delivery surcharges.
For new projects, these cost increases are being passed onto those funding new build projects. The producer price index rose for new nonresidential construction by 5.2 percent over the past year. The prices producers and service providers charged for construction resources rose 17 percent.
Delays and supply uncertainty contribute to the volatility, with many contractors experiencing extreme delays in receiving materials or having variable expected delivery dates.
The AGC, including CEO Stephen E. Sandherr, has urged government officials to end tariffs immediately to alleviate the price increase trend. Further, they requested an all-out effort to ease bottlenecks for port and freight transportation businesses.
The Association of General Contractors’ chief economist Ken Simonson sums up the current outlook, “Construction materials costs remain out of control despite a decline in some inputs last month. Meanwhile, supply bottlenecks continue to worsen.”
For more details, view the AGC’s Construction Inflation Alert.
What’s your experience with rising construction materials costs? Tell us about it here.
