High Material Prices & Delays Continue to Stress Contractors

Washington, DC, September 14, 2021-The prices contractors pay for construction materials continued to increase in August while many firms report struggles to get those materials delivered on time, according to an analysis by the Associated General Contractors of America of government data.

Association officials urged Washington officials to take steps to help address the challenges impacting the entire supply chain and driving the price escalations.

“July was the seventh-straight month of double-digit price increases for construction inputs,” said Ken Simonson, the association’s chief economist. “Adding to the challenge, contractors are struggling to pass along even a fraction of these added costs onto their clients.”

The producer price index for new nonresidential construction-a measure of what contractors say they would charge to erect five types of nonresidential buildings-rose 5.6% over the past 12 months. That was little more than a quarter of the 20.6% increase in the prices that producers and service providers such as distributors and transportation firms charged for construction inputs, Simonson noted.

There were double-digit percentage increases in the selling prices of materials used in every type of construction. The producer price index for steel mill products increased by 123% compared to last August. The index for lumber and plywood jumped 15.9% during the past 12 months. The index for copper and brass mill shapes rose 45.3% and the index for aluminum mill shapes increased 35.1%. The index for plastic construction products rose 29.6%. The index for gypsum products such as wallboard climbed 22.9%. The index for insulation materials rose 17.2%, while the index for prepared asphalt and tar roofing and siding products rose 15.8%.

In addition to increases in materials costs, transportation and fuel costs also spiked. The index for truck transportation of freight jumped 14.1%. Fuel costs, which contractors pay directly to operate their own trucks and off-road equipment, as well as through surcharges on freight deliveries, have also jumped.

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