The Associated General Contractors of America (ACG) recently reported that the cost of construction materials has declined for the third consecutive month and decreased year-over-year for the first time since 2009. It analyzed the Producer’s Price Index (PPI), which covers materials that are used for various types of projects, including many items that are consumed by contractors.
The U.S. Department of Labor’s July PPI confirmed the decline in price for several key construction materials including:
- Steel mill products: Down 2.8 percent in July and 5.9 percent versus one year ago
- Copper and brass mill shapes: Up 0.5 percent last month, but down 16 percent year over year
- Aluminum mill products: Down 1.3 percent in July and 9.2 percent through 12 months
- Diesel fuel: Down 0.2 percent in July and 9.3 percent over the past year
ACG warned that increases in diesel fuel and steel prices have risen since the July report, a change that could drive construction costs higher. ACG also noted that material costs will almost certainly rise if economic growth accelerates.
For public and private builders, reduced prices, however temporary, are good reason to accelerate projects now as delays could result in significantly higher material costs down the road.
What’s your take on AGC’s report? Let us know in the comments.