Construction material prices climbed 0.4% in July and are up 2.2% on a year-over-year basis, according to Associated Builders and Contractors. Prices in July were 42.7% higher than in February 2020.

Nonresidential construction material prices rose 0.4% from June to July and increased 2.6% compared with one year ago. Softwood lumber prices are up 7.7% year over year and down 1.9% from June to July. Iron and steel prices are up 6.2% year over year and down 0.2% for the month. Natural gas fell 2.1% from June to July and is up 20.5% year over year. Crude petroleum rose 1.7% for the month and is down 16.6% year over year.

“Construction materials prices continued to increase too quickly in July,” said ABC Chief Economist Anirban Basu. “Nonresidential input prices have risen at a 5.8% annualized rate since January, and trade policy will likely continue to put upward pressure on materials prices over the next several months. Copper wire and cable prices, for instance, surged 5% in July and are now up 12.2% over the past year. While contractors remain relatively upbeat, according to ABC’s Construction Confidence Index, input price escalation may diminish profit margins during the final months of the year.

“The rapid increase in broader producer prices in July is just as worrying as rising construction input costs,” Basu continued. “With prices for final demand goods and services rising at the fastest pace since March 2022, the Federal Reserve will have to consider the prospect of resurgent inflation when deciding whether to cut rates at its September meeting. The construction industry is in desperate need of lower borrowing costs, and higher rates for longer would continue to weigh on construction spending.”

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