Construction Materials Costs Rose 1.4% Month to Month and 5.3% Year over Year
Construction materials costs increased 1.4% in November 2007 from October and now stand 5.3% higher than last November, ending six months of negligible cost increases. More gains are ahead, but at a slower pace.
The November surge was primarily for fuel products, but also included the initial pass-through of higher energy costs to cement and plastic construction products. Diesel prices jumped 19% in November, but already-available market data assures little, if any, increase will be reported for December.
Fabricated steel prices rose 0.7% month to month, possibly the beginning of the anticipated 10% to 15% rise in steel costs over the next year, as extremely lean inventories are rebuilt while world steel demand continues to rise rapidly.
The price for aggregates rose 0.6%.
Lumber and gypsum prices fell further with the continuing cutbacks in housing starts and steady activity at non-residential building job sites.
Non-ferrous metal prices dropped again. Supply is still stressed in this market, so sustained declines through the winter are not expected.
Prices for manufactured products and machinery were steady to slightly up, with this trend expected to continue. Factory productivity gains are largely offsetting rising prices for imported materials and components.
Cost Trends between Construction Sectors are Widening
Cost trends between construction sectors are widening. The Bureau of Labor Statistics index for the mix of materials used in single-family construction increased only 0.4% in November and is still up only 2.5% from a year ago.
However, costs for non-residential buildings rose 2.0% in November to stand 6.8% above a year ago, due to relatively less lumber in the mix (i.e., versus residential) and more metals and concrete.
Highway costs jumped 3.6% in November to stand 11.8% higher than a year ago because most of the materials in highway projects are commodities priced largely in world markets.
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