Dive Brief:
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Construction materials prices fell 1.6% between August and September and 5.3% year-over-year, the largest yearly decline since October 2009, the Bureau of Labor Statistics reported Wednesday.
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Of the 11 key input prices tracked by the BLS, only three — concrete products, plumbing fixtures and fittings, and crude petroleum — grew between August and September, according to an analysis by the Associated Builders and Contractors.
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ABC Chief Economist Anirban Basu attributed September's decrease, which followed a 0.9% dip in August, to the global economy that "has continued to soften in recent weeks."
Dive Insight:
This steady decline in material prices is the result of "weaken[ed] demand for global commodities even as supply of many inputs continues to be elevated," Basu said.
Another factor in the price dip: Anticipation of a possible Federal Reserve interest rate hike in September kept the dollar strong and commodity prices down. Now that the Fed has decided to delay that interest rate hike — for the time-being, at least — the ABC expects October's material costs to see a less severe decline.
The consecutive months of input price decreases have defied the conventional trend of construction material prices rising in correlation with construction spending, as increased demand often leads to higher prices.
The Commerce Department reported earlier this month that August construction spending rose 0.7% between July and August, reaching its highest level in more than seven years. Although there is a gap of a few weeks between construction spending and material cost reports, the two results have continued to trend in opposite directions.
Despite possible negative implications about the global economy, the lower material prices could signal good news for builders looking to capitalize on the cheaper commodities during a construction boom across the U.S.
