Materials prices fall but bid prices edge upwards in US construction

Crane and skyscrapers under construction in San Jose, South San Francisco bay area Image: Sundry Photography via AdobeStock - stock.adobe.com)

Construction firms in the US are getting some relief from rising materials costs, as the price of materials and services dropped by 0.6% in April to May 2023.

But contractors’ bid prices have edged up by 0.1% in May, according to the Associated General Contractors of America (AGC), which has analysed new government data.

Association officials said contractors are finally seeing some relief from recent supply chain problems and price escalations but cautioned that some key materials are still very hard to find and warned that new federal ‘Buy America’ mandates could lead to future price escalations.

“Contractors’ bid prices have been virtually flat since January as supply and price shocks from Russia’s attack on Ukraine and the pandemic have faded,” said Ken Simonson, the association’s chief economist.

“But there are still exceptionally long lead times for electrical equipment and renewed or persistent price increases for steel and concrete.”

The 0.1% rise in contractors’ bid prices to build a specific set of buildings followed a 0.3% fall in April.

Prices for most major construction inputs were stable or declined in May. But the index for steel mill products jumped 5.2%, following a 3.6% increase in April. The index for concrete products rose for the 30th month in a row, by 0.8%, producing a year-over-year increase of 12.5%.