The analysis by the Associated General Contractors of America reports a 0.4 percent increase in nonresidential construction materials and services in March, marking a consecutive three-month rise in prices. The rise is attributed to a wave of tariff announcements influencing various material suppliers to increase prices.
Ken Simonson, the association's chief economist, stated, “Lumber and metals prices shot up in March, while contractors’ inboxes are bulging with ‘Dear Valued Customer’ letters announcing further increases for many products.” He expressed concern over the effect of tariffs on essential construction goods, noting their potential to increase prices drastically.
The producer price index for new nonresidential construction—encompassing all relevant materials and services—rose 0.4 percent in March. This follows previous increases of 0.6 percent in February and 0.8 percent in January, making it the first three-month continuous rise since September 2023, subsequent to a prolonged period of stable or declining prices, Simonson added.
The increase in March was significantly driven by metals and lumber prices, with steel mill products shooting up by 7.1 percent, aluminum mill shapes by 5.1 percent, and lumber and plywood by 2.7 percent.
Simonson pointed out that these prices, collected around March 11, preceded recent tariff implementations. The tariffs now include a 25 percent increase on steel and aluminum imports, among others, with further tariffs under review or temporarily suspended.
Officials from the association highlighted the influence of new and anticipated tariffs on construction material costs, projecting further cost increases for both private and public sector projects. They urged the Trump administration to consider postponing new tariff impositions to assess the effects of existing tariffs.
Jeffrey Shoaf, the association's CEO, stated, “Our members are trying to deliver the best value for the public and private sector clients they serve,” highlighting the challenges imposed by fluctuating material costs on project delivery and financial planning.