Dive brief:
- Total construction prices and non-residential inputs decreased by 0.2% in December, according to an analysis by Associated Builders and Contractors.
- Much of the recent stability in input prices over the past year has come from lower energy costs, including a drop of $0.45 per gallon in diesel prices from December 2023, said Anirban Basu, economist head of ABC.
- However, copper and oil prices rose sharply to close out 2024, raising concerns about material price increases in 2025 if President-elect Donald Trump enacts high tariffs, said Ken Simonson, an economist at head of Associated General Contractors of America.
Diving knowledge:
The ABC report reveals the ongoing tension between the near-term stability of construction input prices and longer-term concerns about volatility.
For example, the fall in input prices in December reflects broader stability seen through much of 2024, with year-on-year increases of 0.9% overall and 0.6% for non-residential inputs. But material-specific pressures, such as rising copper and oil prices, point to a potential upward shift in costs.
“There is significant variability across input categories,” Basu said. “Prices for other inputs, such as copper wire and cable or sand and gravel products, have increased significantly over the past year.”
Simonson highlighted these concerns, especially around tariffs under the Trump administration.
“Costs are likely to rise much faster in 2025,” Simonson told Construction Dive. “Many other construction materials are likely to experience sudden price increases if President-elect Trump follows through on his threats to impose high tariffs.”
That malaise is in line with AGC’s Jan. 8 construction outlook survey, where most contractors cited rising material costs and rates as top concerns for the coming year.
However, despite these challenges, contractor sentiment remains upbeat, Basu said.
“The fact that overall input prices have remained stable in recent quarters is good news,” Basu said. “Just 20% of contractors expect their profit margins to fall over the next six months, according to the ABC’s Construction Confidence Index.”
