The price of construction materials increased 0.5% in March, while nonresidential input prices climbed 0.6%, both unusually steep jumps, according to an analysis by Associated Builders and Contractors (ABC) of U.S. Bureau of Labor Statistics data as reported by Construction Dive. Both overall and nonresidential input prices are now 0.8% higher than a year ago and sit more than 40% higher compared to February 2020, largely due to a sharp rise in natural gas, steel, copper and lumber prices. The price escalations across the board reflect early impacts from tariffs and mark the third straight month of price jumps, said Anirban Basu, ABC chief economist. “Construction input prices increased at a rapid pace for the third consecutive month in March and have now risen at a 9.7% annualized rate through the first quarter of 2025,” said Basu.
Pressure is mounting for owners and builders heading into the second quarter, especially as tariff-related uncertainty clouds purchasing and pricing decisions, according to the Associated General Contractors of America (AGC). Suppliers hit contractors with a wave of price hike notices in March, even before new tariffs took effect. That volatility is making it harder to plan and budget for both public and private sector projects, said Ken Simonson, AGC chief economist. “Lumber and metals prices shot up in March, while contractors’ inboxes are bulging with ‘Dear valued customer’ letters announcing further increases for many products,” said Simonson. “Rapid-fire changes in tariffs threaten to drive prices higher for many essential construction goods.”
The monthly increases mark the first time since September 2023 that input prices jumped for three consecutive months, said Simonson. Construction input prices have now increased at a 9.7% annualized rate through the first quarter of 2025, said Basu.