Construction input prices fell by 0.3% in June, according to the latest Associated Builders and Contractors (ABC) analysis of the U.S. Bureau of Labor Statistics' Producer Price Index. For the month, Nonresidential construction input prices declined by 0.4%. Overall construction input prices are 1.1% higher than year-ago levels, while nonresidential construction input prices are 0.7% higher. 

Prices for lumber and wood products remain unchanged, while the cost of softwood lumber decreased by 0.5%, and concrete products went up by 0.4%. This is the second consecutive month of overall input price declines following a spate of consecutive increases that were recorded beginning last December.  

“Construction materials prices dipped in June, perhaps a reflection of declining project starts in a number of construction segments and an associated dip in demand,” said ABC Chief Economist Anirban Basu. “For instance, input prices fell in the multifamily segment, where many contractors indicate substantial softening of demand for their services. The same was true of input prices in commercial construction segments.”

“While ABC members continue to report stable backlog as measured by the Construction Backlog Indicator and steady confidence as measured by the Construction Confidence Index, there remain reasons for concern,” Basu added. “While construction input prices fell last month according to today’s report, overall inflation as measured by the Producer Price Index is hotter than anticipated. The Federal Reserve is still looking for data indicating that 2% inflation will soon be reestablished, so data like these may forestall much-anticipated and desired interest rate cuts. That translates into higher interest rates for longer, which would be damaging to construction industry prospects.”

Our reporting on how the cost of construction has impacted the architecture industry recently can be found here.