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, impacting a wide range of building and road materials, including many that are subject to the new tariffs.  The association looked at Labor Department data to evaluate how much the construction industry will be impacted by the new tariff’s costs.

“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 price of construction for the same time period. This Department of Labor data analysis did not include any impact in 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).
  • Steel and aluminum tariffs which recently went into effect for Canada, Mexico and the European Union May 31 are not reflected in this data analysis. 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 are having a positive impact on steel mill towns as more workers are being 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.”

K-Con Inc. is a full-service design-build general contractor specializing in commercial, light-industrial and government construction.  K-Con Inc. serves commercial and government entities in Charleston and across the United States.  Please contact us today to see how we can best serve your needs.