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Fri, 08/11/2023 – 12:22

Construction Material Prices Remain Mostly Flat in the Month of July; Buy America Rules Remain an Ongoing Challenge for Firms as They Try to Find Materials that Comply

The price of materials and services used in nonresidential construction inched up 0.2 percent from June to July, while a government index that measures contractors’ bid prices fell by 1.4 percent, according to an analysis by the Associated General Contractors of America released today. Association officials said contractors are finally seeing some relief from recent supply chain problems and price escalations, but the competitive market means key materials are still very hard to find.

The impacts from the pandemic and Russia’s attack on Ukraine have faded, however, long lead times remain for electrical equipment and construction machinery. Cement, lumber, plywood and asphalt coatings are some of the materials showing persistent price increases.

The producer price index for new nonresidential construction—a measure of what contractors report they would charge to put up a specific set of buildings—fell 1.4 percent in July. That decrease followed no change the month prior and a slight decline in May.

Prices for most major construction inputs were stable or declined in July. Some of the greatest declines included diesel fuel, falling 8.4 percent for the month, steel mill products dropping 7.6 percent, and fabricated structural metal, down 6.4 percent.

Association officials said that new Buy America requirements that are part of the Bipartisan Infrastructure Law will severely limit the supply of materials contractors can use and increase the costs of those products as the guidance goes into effect. They noted that the new requirements are so strict that many products currently made in the U.S. would not be compliant due to containing small components that are sourced from abroad.

“Federal officials continue to inhibit the ability of contractors to utilize an established diversified construction material supply chain by drumming up strict regulations,” said Stephen E. Sandherr, the association’s chief executive officer. “Infrastructure is needed now, and until we have the capability of keeping all manufacturing on U.S. soil, we need to take advantage of all resources available.”

View producer price index data.