Last month, I attended NAHB’s midyear meeting in Miami and had the pleasure of sitting in on a presentation by Daniel Swift, president and CEO of Des Moines-based architecture group BSB Design.
Inflating Material Prices
According to Associated General Contractors of America (AGC), in the past two years, construction costs appear to be rising faster than the general rate of inflation. Heavy construction in the U.S. and rapid growth in Asia have created a strong demand for a number of construction materials.
According to Associated General Contractors of America (AGC), in the past two years, construction costs appear to be rising faster than the general rate of inflation.
Heavy construction in the U.S. and rapid growth in Asia have created a strong demand for a number of construction materials.
"The impact of the hurricanes has shown up most dramatically in the cost of diesel fuel and natural gas," says Ken Simonson, chief economist for AGC.
Inflation of diesel fuel impacts contractors most. "It's important to contractors because not only do they use diesel fuel to power their own construction trucks, concrete mixers and cranes, they also pay a fuel surcharge on deliveries to their job sites," Simonson says.
Simonson recommends coping with inflation prices by staying in contact with suppliers and keeping the homebuyer informed.
|Percentage change in 12 months ending||Sept. 2004||Sept. 2005|
|#2 Diesel Fuel||54.7||50.9|
|Paving Mixtures & Blocks||2.9||10.5|
|Concrete Block & Brick||4.8||8|
|Precast Concrete Products||6.3||6.5|
|Prestressed Concrete Products||7.6||4.5|
|Brick & Structural Clay Tile||3.1||5.2|
|Asphalt Felts & Coatings||2.1||13.2|
|Plastic Construction Products||6.3||5.4|
|Lumber & Plywood||16.5||-8.5|
|Steel Mill Products||48.2||-5.5|
|Hot-rolled Bars, Plates & Structural Shapes||61||-2|
|Steel Pipe & Tube||66||0.3|
|Copper & Brass Mill Shapes||32.2||19.2|
|Aluminum Mill Shapes||7.5||5.6|
|Structural, Architectural, Pre-Engineered Metal Products||24.1||3.5|
|Fabricated Structural Metal||23.7||3.5|
|Fabricated Structural Metal for Buildings||18.9||3.4|
|Architectural & Ornamental Metalwork||24||1.8|
|Fabricated Iron & Steel Pipe, Tube & Fittings||30.8||3.6|
|Nonferrous Pipe, Tube & Fittings||2||12.8|
|Fabricated Steel Plate||11.5||-5.7|
|Prefabricated Metal Buildings||32.9||1.8|
|Construction Machinery & Equipment||3.9||6.7|
|Source: Associated General Contractors of America