Roofing and building material prices increased more than 20 percent from January 2021 to January 2022, according to an analysis of government data by the Associated General Contractors.
The association recently released a new edition of its Construction Inflation Alert, a report for project owners, officials and other stakeholders. In a recent discussion we got the pleasure to have with the CEO of a Chicago based company Len Roofing Chicago North Shore, Len said we continue to have a steady flow of work as always, however, we have noticed a marked increase in roofing material costs which means our project costs are higher than this time last year.
“Unfortunately, there hasn’t been a break earlier this year in the extreme cost increases that contractors endured in 2021,” said Ken Simonson, the association’s chief economist. “Apparently they are passing on more of those costs, but they will have an ongoing challenge getting timely deliveries and finding enough workers.”
The producer price index for inputs for new non-residential construction (the prices charged by producers of goods and service providers, such as distributors and transportation companies) increased 2.6% from December to January and 20.3% in the last 12 months.
By comparison, the non-residential new construction index, a measure of what contractors say they would charge to erect five types of non-residential buildings, rose 3.8 percent in the month and 16.5 percent from a year ago.
A wide range of inputs contributed to the more than 20 percent increase in the cost index.
The steel products price index soared 112.7 percent in 12 months, despite a 1.6 percent drop in January. The index for plastic construction products rose 1.8 percent in the month and 35.0 percent in 12 months. The diesel fuel index rose 5.1 percent in January and 56.5 percent for the year. The index for rolled aluminium profiles rose 5.6 percent in January and 32.7 percent in 12 months, while the index for rolled copper and brass profiles rose 4.1 percent in January and 24 .8 percent during the year.
Architectural coatings, such as paint, saw an unusually large price increase of 9.0 percent in January and 24.3 percent in 12 months. The sawn wood and plywood index rose 15.4 percent for the month and 21.1 percent for the year. Other inputs with double-digit increases in the last 12 months include asphalt roofing products, up 19.8 percent; insulation, 19.2 percent; trucks, 18.3 percent; and construction machinery and equipment, 11.4 percent.
Association officials said construction companies are being pressured by rising material costs and a shortage of skilled labor.
They urged federal officials to take additional steps to address supply chain disruptions and steadily rising material prices. These include continuing to eliminate costly fees on key construction components.
“Rising materials prices make it difficult for most companies to benefit from any increase in demand for new construction projects,” said Stephen E. Sandherr, executive director of the association.
“If not eased, these price increases will undermine the economic margin of many projects in development and limit the positive impacts of the new infrastructure bill.”