What this means for the industry

Sebastian ObandIn of constructiondive.com reported that in May, construction input prices saw a 0.9% decrease, driven largely by falling energy prices and broad-based slowing inflation, according to the Associated Builders and Contractors (ABC). This marks the first drop in input prices for 2024. However, it’s worth noting that both overall and non-residential construction costs are still up 2.1% and 2.2%, respectively, from a year ago.

Construction input prices fell for the first time since December. Despite rising somewhat sharply over the first four months of 2024, they are up just 2.1% year over year,” says Anirban Basu, ABC's chief economist. “Moreover, the Producer Price Index's economy-wide measure of final demand prices fell in May. Combined with the cooler-than-expected Consumer Price Index data, this signals slowing inflation and raises the possibility that the Federal Reserve may cut rates sooner than anticipated.”

Despite these price increases compared to last year, the actual costs of ongoing projects have largely remained stable. According to Macrina Wilkins, senior research analyst with the Associated General Contractors of America, this is a critical point: