Construction Material Prices Continue to Fall
December 13, 2012

Construction materials costs dropped in November, according to an analysis of new federal figures released today by the Associated General Contractors of America (AGC). AGC officials have attributed the drop to a decrease in diesel prices along with smaller decreases in a variety of other inputs.

AGC officials also noted that some of the price declines “may be related to the fact that the threat of the fiscal cliff is already having an impact on demand for construction and related materials.”

“The recent price decreases are very welcome after years of price spikes that contractors could not pass on in a weak construction market,” says Ken Simonson, chief economist for the construction trade association. “These price declines may be yet another sign that the threat of the fiscal cliff has already taken a toll on demand.”

For the 12 months ending in November, the producer price index for all construction inputs rose 1.0 percent, closely matching the increase in prices contractors charge for new buildings. Between October and November, however, construction materials prices fell by 1.1 percent, while the amount contractors charge to build industrial buildings, new offices and new warehouses was unchanged and down 0.3 percent for new school construction.

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