Price of construction materials rises 5.3% in Dec.

Posted 1/20/12

ARLINGTON, Va. – The national price of key construction materials rose 5.3 percent in December compared with a year ago, while contractor bids rose only between 3.3 and 4.7 percent year over year, according to the Associated General Contractors of America.

The increase in material prices combined with the slower pace of what builders are charging is eating away at profit margins of construction projects, Associated General Contractors Chief Economist Ken Simonson said in a news release with the December numbers, which were based on an analysis of Labor Department figures.

“Any relief contractors might get from the recent declines in material prices is being offset by their inability to increase prices for new construction projects,” Simonson said. “With overall demand relatively weak and public sector investments in construction declining rapidly, construction remains a buyer’s market.”

Specific materials that have risen year over year include diesel fuel, up 20.2 percent, steel mill products, up 11.3 percent, and asphalt paving mixtures up 8.4 percent. Meanwhile, the index measuring bids for new industrial buildings increased year over year a modest 3.3 percent, office construction rose 3.9 percent, warehouse construction increased 3.8 percent and school buildings jumped 4.7 percent.

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