According to new data released from the Bureau of Labor Statistics on August 12, nonresidential construction prices have increased 23.4% since this time last year, including a 0.8% increase over last month.
These costs increase as softwood lumber prices tumble (down 29% last month alone after a record high). But lumber prices occupy part of the picture, not the most significant factor in nonresidential construction.
Energy prices are rising at alarming rates, with natural gas up 146% year-over-year and crude petroleum up 102%. In addition, the cost of steel mill products is up 108%, with a 10% rise in July.
Anirban Basu, the chief economist at Associated Builders and Contractors (ABC), said that many factors contribute to the price hikes, including the rebounding economy, ongoing supply chain disruptions, and limited production capacity.
"Many economists insist that the current situation is merely temporary; still, today's input price increases can meaningfully affect contractor fortunes by trimming margins and delaying the onset of projects," Basu said in a press release. "One can only conclude that the economy will continue to run hot into 2022 despite the malign impact of the delta variant, producing both hefty advances in gross domestic product and unusually elevated inflation."
The statement pointed to the rise in steel prices as a sign that the problem is not limited to the United States but is a global supply issue.
"That dynamic does not appear poised to change substantially in the very near-term," Basu said.
Rising nonresidential construction costs, driven by manifold factors, stand as an ongoing concern not only in the United States but globally.