ARLINGTON, Va. (Feb. 15. 2022) — Prices of construction materials jumped more than 20% from January 2021 to January 2022, according to an analysis by the Associated General Contractors of America (AGC) of government data. The association recently posted a new edition of its Construction Inflation Alert, a report to inform project owners, officials, and others about the challenges volatile materials costs, supply chain disruptions, and labor shortages posed for construction firms.

“Unfortunately, there has been no letup early this year in the extreme cost run-up that contractors endured in 2021,” said Ken Simonson, AGC's chief economist. “They are apparently passing on more of those costs but will have a continuing challenge in getting timely deliveries and finding enough workers.”

The producer price index for inputs to new nonresidential construction — the prices charged by goods producers and service providers such as distributors and transportation firms — increased by 2.6% from December to January and 20.3% over the past 12 months. In comparison, the index for new nonresidential construction — a measure of what contractors say they would charge to erect five types of nonresidential buildings — climbed by 3.8% for the month and 16.5% from a year earlier.

A wide range of inputs contributed to the more than 20% jump in the cost index, Simonson noted. The price index for steel mill products soared 112.7% over 12 months despite declining 1.6% in January. The index for plastic construction products climbed 1.8% for the month and 35.0% over 12 months. The index for diesel fuel jumped 5.1% in January and 56.5% for the year. The index for aluminum mill shapes jumped 5.6% in January and 32.7% over 12 months, while the index for copper and brass mill shapes rose 4.1% in January and 24.8% over the year. Architectural coatings such as paint had an unusually large price gain of 9.0% in January and 24.3% over 12 months. The index for lumber and plywood leaped 15.4% for the month and 21.1% year-over-year. Other inputs with double-digit increases for the past 12 months include roofing asphalt products, 19.8%; insulation, 19.2%; trucking, 18.3%; and construction machinery and equipment, 11.4%.

Association officials said construction firms are being squeezed by increases costs for materials and labor shortages. They urged federal officials to take additional steps to address supply chain disruptions and rising materials prices. These include continuing to remove costly tariffs on key construction components.

“Spiking materials prices are making it challenging for most firms to profit from any increases in demand for new construction projects,” said Stephen E. Sandherr, AGC CEO. “Left unabated, these price increases will undermine the economic case for many development projects and limit the positive impacts of the new infrastructure bill.”

View producer price index data. View chart of gap between input costs and bid prices. View the February 2022 Construction Inflation Alert.