Construction Materials Price Index Ends 2012 Quietly

The producer price index (PPI) for gypsum products soared 14.0 percent in 2012, reflecting demand from new apartment and home construction, along with renovations of office and retail space. Gypsum made the largest gains in 2012 while many other sectors remained flat or fell, absorbing large increases in 2010 and 2011.

Prices for construction materials inched down in December, closing out a year of subdued changes in materials costs and bid prices as the industry struggled to create and sustain growth.

For the 12 months ending in December, the producer price index for all construction inputs rose 1.3 percent. Materials costs rose more than 5 percent in both 2010 and 2011, while bid prices were virtually unchanged in 2010 and rose between 2.9 and 4.8 percent in 2011 (depending on building type) according to an Associated General Contractors of America report.

Diesel prices climbed 1.8 percent, the smallest gain since 2008. The indexes for concrete products rose 2.4 percent and asphalt paving mixtures and blocks, 4.4 percent. The index for steel mill products fell 7.9 percent in 2012 after leaping more than 12 percent in both 2010 and 2011.

Other building products with substantial price increases included lumber and plywood, 10.8 percent; architectural coatings, such as paint, 10.1 percent; insulation materials, 5.1 percent; and plastic construction products, 4.7 percent.

AGC officials noted that 90 percent of contractors surveyed for the group's 2013 business forecast predict materials prices will increase in 2013. AGC economist Ken Simonson added that an increasing number of contractors will try to pass on some of those price increases to customers this year, noting that 29 percent report they will try to raise bid prices this year, compared to only 15 percent that raised prices in 2012.