Inflation’s Impact on Building Material Prices–What You Need to Know

Is inflation finally loosening its grip on the construction industry?

The cost of building materials has been a thorn in the side of construction and building industry professionals for the past year. However, according to recent data from Principia’s ongoing, monthly builder and contractor survey, the average price increase for building products has gradually declined.

This trend aligns with the overall deceleration of inflation in the U.S. economy. Inflation’s impact on the building materials sector has been particularly pronounced. Higher costs for raw materials, transportation, and labor created a perfect storm, driving up prices. However, like the rest of the economy, inflation for building materials seems to be slowing down. This is evidenced by contractor and builder respondents reporting their product costs increases have been less pronounced in a 12-month rolling average.

Pricing examination alongside margin analysis are fundamental elements to help ensure continued growth. It can be a good time to evaluate your strategy when major market shifts occur, such as pricing adjustments. Now may be the right time to consider:

• Are building products at the start of a new phase in terms of pricing? 
• Is the feedback from builders and contractors an early indication for what is to come?
• What could this mean for your organization?