Modest Increase in Construction Material Costs Despite Falling Energy Prices
Key Highlights
- Construction input prices increased by 0.2% in August, with nonresidential inputs up 0.2% as well
- Prices are 2.3% higher than a year ago, driven by tariff-affected materials like steel and copper
- Energy prices, including crude petroleum and natural gas, decreased by 2.8%, impacting overall cost increases
WASHINGTON, DC — Construction input prices increased 0.2% in August compared to the previous month, according to an Associated Builders and Contractors analysis of the US Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices also increased 0.2% for the month.
Overall construction input prices are 2.3% higher than a year ago, while nonresidential construction input prices are 2.6% higher. Prices decreased in all three energy categories last month. Crude petroleum and natural gas prices were both down 2.8%, while unprocessed energy materials prices decreased 2.5% in August.
“Construction materials prices rose modestly in August, although the increase would have been larger if not for declining oil and natural gas prices,” said ABC Chief Economist Anirban Basu. “Prices rose at an especially rapid pace in some of the categories most affected by tariffs. Iron and steel prices, for instance, are now up 9.2% on a year-over-year basis, while copper wire and cable prices are up 13.8%. Even though nonresidential input prices have risen at a 5.3% annualized rate in 2025, contractors remain broadly optimistic about their profit margins over the next six months, according to ABC’s Construction Confidence Index.”
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.