Tariffed Construction Materials Prices Rise in May, Reports ABC

WASHINGTON (June 12, 2025) — Construction input prices increased 0.2% in May compared to the previous month, according to an Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices increased 0.3% for the month.

Overall construction input prices are 1.3% higher than a year ago, while nonresidential construction input prices are 1.6% higher. Prices decreased in 2 of the 3 energy categories last month. Natural gas prices were down 18.7%, while prices for unprocessed energy materials were down 3.5%. Crude petroleum prices increased 1.3% in May.

“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,” said Basu. “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.”
 

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