Construction materials prices fell in November after marching upward for much of 2018, signaling a reprieve in rapid price increases in the months to come, according to an analysis by a trade group.
Though the price of commonly used construction goods fell 1.8 percent between October and November, materials are still 5.3 percent more costly than they were in November 2017, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor statistics data. Similarly, the price of nonresidental construction products was down by 1.7 percent in November and but up by 5.8 percent from the year before.
The decrease follows months of fast-rising prices due to ongoing trade disputes and a high demand for goods such as steel and softwood lumber. In November, prices fell in five of 11 categories of construction goods; natural gas was the only material to record a substantial increase, rising 15 percent from October.
Anirban Basu, ABC’s chief economist, said a weaker global economy in recent months has driven down demand for construction inputs, slowing the price increases seen in recent months. With more investors favoring the U.S. dollar, the value of the currency has risen, which can suppress materials prices. Domestic production of products such as oil, lumber and steel also appears to have risen along with higher prices, Basu said.
“The impact of expanding domestic production can be observed in the data,” Basu said. “For instance, steel mill product prices are up nearly 19.8 percent compared to a year ago but rose just 0.5 percent in November. Softwood lumber prices, which increased sharply earlier this year, are now down nearly 11 percent compared to last year and fell 3 percent in November.
“With the global economy expected to continue to weaken and the dollar expected to remain strong, contractors should expect only moderate increases in materials prices during the early months of 2019, though further declines in input prices are certainly possible,” he added.
The largest month-to-month drop among the 11 products that are part of the price index was crude petroleum, which fell 29.5 percent from October to November. The price of other products grew slowly or registered no change, such as iron and steel prices, which rose 2 percent, and concrete products, which stayed the same between October and November.Follow @“natebeck9”