WASHINGTON - Construction contractors continue to be squeezed between rising materials costs - including lumber and plywood - and falling output prices according to a new analysis of materials costs conducted by the Associated General Contractors of America (AGCA).
The association noted that even as the producer price index leapt in April for key construction components, the amount contractors charge for construction services remains depressed.
“Paying more to earn less is not a sustainable business model,” said Ken Simonson, chief economist for the AGCA. “Contractors are not going to be able to sustain the low prices they have been charging for much longer.”
Simonson noted that prices increased significantly for a range of construction components. Compared to March, the April data shows that diesel fuel was up 6.5% (not seasonally adjusted), steel mill products were up 5.2%, lumber and plywood were up 4.7%, copper and brass mill shapes were up 4.3%, aluminum mill shapes were up 3.6% and gypsum products were up 2.4%. Over the past year, increases in materials costs by structure type have ranged from 3.9% for single-unit residential construction to 8.3% for inputs to highway and street construction.
“These trends suggest that anyone considering a construction project should break ground promptly, before materials costs are reflected in higher bids and while there are still abundant contractors to do the work,” Simonson added.
Read Associated General Contractors of America's press release.
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