Based on the Bureau of Labor Statistics' December Producer Price Index, construction materials costs were down for November. But, the Associated General Contractors of America's Chief Economist Ken Simonson says that trend is not likely to last.

“The next 12 months are still likely to show higher costs for construction than for the economy as a whole,” Simonson says. “The index for construction materials and components dropped 0.5% in November, even as the overall PPI for finished goods climbed 0.8%.” During the last 12 months, construction costs have jumped 5% compared with a 2% increase for the consumer price index and a 0.9% increase for the finished-goods PPI.

“The recent retreat in construction costs was widespread but not universal,” Simonson says. “There were price declines in November for diesel fuel, asphalt, plastic construction products, lumber and plywood, gypsum products and steel and copper products. But there were continuing increases in the prices of most concrete products, brick, and aluminum mill shapes.

“The ongoing retreat in home construction will maintain downward pressure on gypsum and wood prices. But petroleum, cement, and metals remain at historically high levels, which will tilt nonresidential construction costs up.”