Construction costs increased in March, according to an analysis of Labor Department data released Tuesday by the Associated General Contractors of America.
Prices for several building materials increased, including those subject to proposed tariffs, which could drive prices even higher, according to AGC.
“Prices increased for many items in March, even before tariffs announced for steel, aluminum and many items imported from China have taken effect,” AGC Chief Economist Ken Simonson said in a statement. “Steel service centers and other suppliers are warning there is not enough capacity at U.S. mills or in the trucking industry to deliver orders on a timely basis. Thus, contractors are likely to experience still higher prices as well as delivery delays in coming months.”
Between February and March, the producer price index for final demand increased 0.5%, while the index for the cost of materials increased 0.8%. New residential construction costs increased 1.6%.
Prices for oriented strand board increased 9.3% since February, according to the National Association of Home Builders, followed by ready-mix concrete (3.3%), softwood lumber (2.2%), structural steel (2.0%), and gypsum products (1.1%).
The PPI saw its steepest year-over-year increase in materials since 2011, according to AGC’s Simonson, rising 5.8% over the last 12 months. It’s up 2.6% since the start of the year.
Year-over-year price index increases by materials include:
• Diesel fuel: 39.7%
• Lumber and plywood: 13.7%
• Aluminum mill shapes: 11.4%
• Copper and brass mill shapes: 11.2%
• Gypsum products: 8.4%
• Plastic: 5.8%
• Concrete: 4.9%
• Insulation: 2.3%
Stephen Sandherr, chief executive officer of AGC, said in the statement that “tariffs will harm contractors that are currently working on projects for which they have not bought materials and will disrupt budgets for future construction.”
He added, “The best way to help the U.S. steel and aluminum sector is to continue pushing measures, like regulatory reform and new infrastructure funding, that will boost demand for their products as the economy expands.”