Construction material prices rose 1% in January and are up 0.4% on a year-over-year basis, according to Associated Builders and Contractors. Prices in January were 38.7% higher than in February 2020.

Nonresidential construction material prices rose 0.9% from December 2023 to January and increased 0.7% compared with one year ago. Softwood lumber prices are down 9% year over year and up 1.1% December 2023 to January. Iron and steel prices are up 4.5% year over year and 3.5% for the month. Natural gas fell 2.4% from December 2023 to January and is down 55.8% year over year. Crude petroleum rose 6.1% for the month and is down 1.6% year over year.

“Construction materials prices surged in January, ending a streak of three consecutive monthly declines,” said ABC Chief Economist Anirban Basu. “While this represents the largest monthly increase since August 2023, input prices are essentially unchanged over the past year, up less than half a percentage point. As a result of relatively tame input costs, a plurality of contractors expects their profit margins to expand over the next six months, according to ABC’s Construction Confidence Index.

“Additionally, the broader PPI measure of prices received by all domestic producers of final demand products and services rose 0.3% in January, well above the expected 0.1% increase,” Basu continued. “This, along with the hotter-than-expected Consumer Price Index data released earlier this week, suggests that the Federal Reserve may keep interest rates elevated for longer than previously expected.”