Downstream effects seen of growing input costs from oil, lumber, metals
Material prices increased 3.1% in February, year-over-year, according to the Producer Price Index recently released by the U.S. Bureau of Labor Statistics. Prices are up 1.3% since January.
Inputs to all types of construction experiences increased, with commercial work reporting the largest yearly hike at 4.7%. Overall non-residential materials rose 3.7% while inputs to multifamily construction are up 3.2%.
“Construction materials costs surged in February due to significant increases in oil, copper, lumber and steel prices,” Anirban Basu, chief economist at Associated Builders and Contractors, said in a statement. “While input prices are still up a relatively modest 3.1% since February 2025, they rose at a staggering 12.6% annualized rate during the first two months of 2026.”
Since February 2025, natural gas prices rose a whopping 30%, while copper wire and cable and steel mill products increased 27.1% and 20.9%, respectively. Iron and steel prices also reported a double digit increase, at a rate of 15.3%.
This trend is expected to continue, given current events, said Basu. “Notably, this data does not reflect the precipitous increase in oil prices, which are near $100/barrel as of this morning, caused by the conflict in Iran,” he said. “That will put upward pressure on construction materials prices directly by raising diesel prices and, indirectly, by raising the cost of shipping other inputs.”
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