Dive Brief:
- Construction material prices fell 0.9% in August after a 0.1% dip in July, the Associated Builders and Contractors (ABC) reported Friday.
- August marks the ninth consecutive month of year-over-year price decreases — the longest streak since 2009.
- ABC Chief Economist Anirban Basu blamed the "frenzied" commodity markets on economic uncertainty and events in China, Brazil, Iran and other countries. "Global demand remains low," he said, "and there is a chance that prices could fall even lower during the months ahead."
Dive Insight:
Basu said the lower prices are good news for contractors, but are hurting those in "commodity-rich communities," including Alaska, North Dakota, New Mexico and Oklahoma, where the states' economies are already struggling. Lower material prices could further drive the recent boom in construction projects — especially in the commercial and multifamily sectors — as builders look to capitalize on the cheaper commodities.
The August input prices, much like in July, bucked the conventional trend of construction material prices rising in correlation with construction spending. The Commerce Department reported earlier this month that July construction spending rose to its highest level since 2008. Material prices, however, have continued to drop.
Of the 11 commodity prices that ABC tracks, only three rose in August: Prepared asphalt, tar roofing and siding; natural gas; and plumbing fixtures and fittings.
The remaining eight materials saw drops in prices: Crude energy materials; fabricated structural metal products; iron and steel; steel mill products; nonferrous wire and cable; softwood lumber; concrete; and crude petroleum.
