Tariffed construction materials increased in price last month, ABC analysis finds | News

Construction input prices rose 0.2% in May, according to a new Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. Last month, nonresidential construction input prices reduced by 0.1%.

Overall construction input prices are 1.3% higher than levels from a year ago, and nonresidential construction prices are 1.6% higher. Prices decreased in two of three major energy categories in April. Natural gas prices fell 18.7%, unprocessed energy materials were down 3.5%, and crude petroleum prices increased by 1.3%.

“Construction materials prices continued to increase at a faster-than-ideal pace in May,” said ABC Chief Economist Anirban Basu. “While input prices are up just 1.3% over the past year, that modest escalation is entirely due to price decreases during the second half of 2024. Costs have increased rapidly since the start of this year, with input prices rising at a 6% annualized rate through the first five months of 2025.”

“Accelerating input price escalation is largely due to rapid price increases for tariff-affected goods like iron and steel,” Basu added. “Expect this dynamic to remain over the next few quarters; these data predate tariffs on iron and steel rising from 25% to 50%, which went into effect on June 4. Despite rising input prices, contractors remain relatively optimistic about their profit margins, according to ABC’s Construction Confidence Index. With cooler-than-expected economywide inflation in May, the number of expected rate cuts in 2025 has risen. If those expectations are realized, it would provide the construction industry with a much-needed tailwind.”

The ABC analysis of April’s construction input price data can be found here. 

Be sure to also follow Archinect’s coverage of tariff issues, including our latest op-ed piece, An Architect’s Case for Tariffs.