Material prices are finally lower than a year ago
Construction input prices, or how much it costs to build a given project, fell for the first time in more than 18 months on a year-over-year basis, but were still 39% higher than February 2020, before the COVID-19 pandemic sent supply chains reeling.
Both overall construction prices and nonresidential costs were down 0.9% and 0.6%, respectively, compared to March 2022, according to an Associated Builders and Contractors analysis. That’s the first time they’ve dropped annually since August 2020, said Anirban Basu, ABC chief economist.
Still, costs inched up over the last 30 days. Overall construction and nonresidential input prices rose 0.2% and 0.4% in March, respectively, compared to the previous month. “The good news is that the latest producer price index data, which show broad-based declines in both goods and services prices, suggest that the expected 25 basis point interest rate hike at the Federal Reserve’s May meeting will be the last of the cycle,” said Basu. “The bad news is that this data indicates greatly diminished pricing power among wholesalers and others.”