Construction input prices in the US went on to increase 0.5% in March, whereas the non-residential input prices surged 0.6%. As per an analysis done by the Associated Builders and Contractors of the US Bureau of Labor Statistics data, both are unusual, steep jumps.
In totality, both overall and non-residential input prices happen to be now at 0.8% higher than what they were in 2024 and over 40% higher as compared to February 2020. This is largely because of the sharp rise when it comes to steel, natural gas, copper, as well as lumber prices.
This price escalation across the board goes on to reflect quite early effects coming from tariffs and marks the third straight month when it comes to price jumps, as per the ABC chief economist, Anirban Basu.
Construction input prices in the US surged at a quick pace for the third consecutive month in March 2025 and have now increased at a 9.7% yearly rate all across the first quarter of 2025. The ongoing effects of tariffs are glaring in the data release of March.
It is worth noting that pressure is indeed mounting for owners as well as builders heading into the second quarter of this year, specifically as tariff-related uncertainty takes its toll on purchasing and pricing decisions, as per the Associated General Contractors of America.
Supplies have hit contractors with a wave of price surge notices in March 2025, much before the new tariffs take effect, says AGC. This kind of volatility is making it even harder to plan as well as budget for both public and private sector projects, says AGC chief economist Ken Simonson.
He adds that lumber as well as metal prices have shot up in March, whereas contractors inboxes happen to be bulging with Dear Valued Customer kind of emails, which go on to announce further increases for numerous products. There are indeed rapid changes that are taking place in tariffs that are threatening to drive the prices even higher for many essential construction products.
Contractors have been speeding up procurement in order to lock in prices early, said one of the vice presidents at a New York-based construction consultancy firm. He further added that general contractors are largely making sure to be proactive in nature and are having procurement discussions much earlier when it comes to projects, wherever possible.
The latest PPI data goes on to indicate one of the largest monthly rises that one has seen in the past 36 months. The construction consultancy firm has started to advise clients to consider more separate contingency scenarios, depending on the project stage and potential as far as the exposure to risk is concerned.
These monthly increases mark the very first time since September 2023 that the input prices have jumped three consecutive months, says Simonson.
According to Basu, construction input prices in the US have now increased at an almost 9.7% yearly rate all through the first quarter of 2025. He further says that although the contractors stay busy for the time being, as per the ABCs construction backlog indicator, this kind of pace when it comes to input price escalation, teamed with rising uncertainty, is going to cause projects to get either delayed or even get cancelled if they persist for any meaningful length of time.
AGC has gone to urge the Trump administration to reconsider the new tariffs at least till the time there was a greater certainty in the market and the impacts of the already put in place tariffs.
The members are indeed trying to deliver the best value as much as possible for the public as well as private sector clients that they serve. But it is indeed hard to deliver that kind of best value when there is no clue as to how much is going to have to be paid for the materials that are required to build the project.