Construction Costs Go Up Dramatically and Outpace Contractor Pricing

by | Jul 6, 2018 | Industry News

An analysis by the Associated General Contractors of America (, a leading association for the construction industry, says that construction costs accelerated in May. The construction cost impacts many building and road materials, including many subject to the new tariffs. The association looked at Labor Department data to evaluate how much the new tariff’s costs will impact the construction industry.

“Prices jumped at double-digit annual rates for metals, lumber and plywood, and diesel fuel, while ready-mixed concrete, asphalt paving, and roofing materials also had unusually large increases,” said chief economist Ken Simonson. “The cost of all goods used in construction rose 8.8 percent from May 2017 to May 2018, the steepest annual increase in nearly seven years.” This comes despite an increase of only 4.2 percent in the construction price for the same period. This Department of Labor data analysis did not include any impact on costs that may occur due to the new tariffs.

AGC reported:

  • Construction material costs rose from May 2017 to May 2018. This included a price increase for aluminum mill shapes (17.3 percent), lumber and plywood (13.9 percent), copper and brass mill shapes (13.8 percent), steel mill products (10.5 percent), diesel fuel (44.5 percent), asphalt felts and coatings (8.9 percent) and paving mixtures and blocks (5.2 percent).
  • This data analysis does not reflect the Steel and aluminum tariffs that recently went into effect for Canada, Mexico, and the European Union on May 31. AGC reported that the U.S. steel mills are inundated with orders that exceed the current capacity of the mills. This may lead to delays in construction or overruns in budgets. However, the tariffs positively impact steel mill towns as more workers are hired to keep up the demand for American-made steel.

“Considering the impact the mere threat of tariffs have had on materials prices and demand, prices are likely to increase further as the new trade restrictions come online,” said Stephen Sandherr, Chief Executive Officer of AGC. “Forcing contractors to pay more for materials and wait longer to receive them will make construction more costly and slower.”

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