Inflating Material Prices

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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.

January 01, 2006

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.

Changes in Costs for Specific Construction Inputs
Percentage change in 12 months ending Sept. 2004 Sept. 2005
#2 Diesel Fuel 54.7 50.9
Asphalt 11.6 15.1
Paving Mixtures & Blocks 2.9 10.5
Concrete Products 7 10
Concrete Block & Brick 4.8 8
Concrete Pipe 4.4 4.3
Ready-mixed Concrete 7.8 12.3
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
Gypsum Products 20.8 12.7
Insulation Materials 11.2 -0.3
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


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