Material costs drop in July, but up for year

With the cost of home building joined at the hip with the cost of materials, July offered more opportunity in the form of slightly lower prices for construction materials.

Overall, prices were 0.2 percent lower in July than they were in June, according to a report from the Bureau of Labor Statistics.

Still, prices aren’t as low as they were a year earlier, with material costs up 4.5 percent over July 2009.

The report indicates softwood lumber prices fell 3.3 percent from June to July.

Locally, the price of a sheet of plywood fell from about a high of $14 earlier this year to $7.50 in recent weeks, according to Rob Griffin, president of Griffin Concepts in Grand Junction as well as the Housing and Building Association of Northwestern Colorado.

Iron and steel prices dropped 2.3 percent nationally in July, nonferrous wire and cable prices slipped 0.8 percent and concrete products were down 0.1 percent.

Meanwhile, prepared asphalt, tar roofing and siding prices were up 3.8 percent in July and were 4.3 percent higher than July of last year.

The overall decline in building materials marked the second consecutive drop, prompting a warning from the Associated Builders and Contractors.

“Economists and others have been wrestling with the issue of deflation in recent months as economic momentum has continued to slow,” said Anirban Basu, chief economist for the ABC. “While economy wide deflation remains unlikely in the minds of many, elements of the U.S. economy will experience a lack of pricing power, which will translate into falling prices.”

Prices were on the rise for two items that affect the construction business. Crude energy prices were up 4.5 percent in July and natural gas prices were up 11.7 percent in July. However, oil prices were on the decline by mid-August, which could keep material prices low.

“The expectation going forward is that construction materials prices will continue to be well behaved and may begin to decline more subF

Mike Moran
Business Times