While the cost of some construction materials have improved, others, in particular concrete, remain elevated and continue to increase. The cost of construction labor also continues to increase at a record rate.


Inflation & Interest Rates

The inflation that has plagued the U.S. economy continued to cool 30.0 during the second quarter. The 12-month change in the Consumer Price Index (CPI), a common measure of inflation, declined by half from 6% in February to 3% in June, which is its lowest level since March 2021. The CPI for the Atlanta area also decreased from 7.2% to 4.6% over the same 12-month period.

After raising interest rates 0.25% in May, the Federal Reserve elected not 20.0 to raise rates at its June meeting. After ten consecutive interest rate hikes, June was the first time since March 2022 the Fed did not raise rates. Despite this pause, the Federal Reserve has not ruled out additional interest rate increases to return inflation to the Fed’s 2% target.

Given this improvement in the broader inflation picture, it is important to remember that the CPI measures the price of goods and services that people buy for everyday living; it does not measure the price of nonresidential construction. There is a Producer Price Index (PPI) that measures the price of nonresidential construction. And, while the CPI indicates that the price of consumer goods and services increased 3% over the last 12 months, the PPI shows that the price of new nonresidential building construction increased 11% over that same period.

SOURCES: U.S. Bureau of Labor Statistics; Board of Governors of the Federal Reserve System



Construction Material Costs | Ready-Mix Concrete

Concrete prices continued to rise in the second quarter of 2023. The average price in Northeast Georgia for standard, 3,000 psi ready-mix concrete was $170.07 per cubic yard, a 15.66% year-over-year (YOY) increase. Several suppliers also announced price increases effective July 1, 2023, ranging from $8.00 to $15.00 per cubic yard.

SOURCES: Ernst Concrete; Smyrna Ready Mix; Argos; Thomas Concrete; Ready Mix USA; Wayne Davis Concrete

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