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Material prices: Are they up, or are they down?

By BECKY GILLETTE

According to Associated Builders and Contractors, construction input prices have fallen 7.2 percent since peaking in August 2014.

“Construction input prices continued to sink to the end of 2015, due in large measure to global deflationary forces that have become increasingly apparent,” said ABC Chief Economist Anirban Basu. “The U.S. dollar remains strong. With only a couple of exceptions, the U.S. is the only major nation to increase interest rates.

“If interest rates rise as anticipated, the dollar will strengthen further in 2016, placing additional downward pressure on input prices. Even significant geopolitical events involving oil producing nations has not been enough to stem the decline in oil or other commodity prices.”

Natural gas prices are down an estimated 46.5 percent over a year ago, and crude oil materials prices fell 43.3 percent for the year.

But materials such as asphalt-based roofing materials are down only 2 percent, according to ABC. Iron and steel prices are down 23.7 percent for the year.

However, contractors in Mississippi said that they haven’t seen any significant decline in costs of materials.

“Most of my contractors say they haven’t seen that much difference,” said Bob Wilson, executive director of Associated General Contractors of Mississippi. “But concrete prices have been going up like crazy. For a lot of them, that is a big part of what they do.”

Wilson said for general contractors like those represented by AGC, small decreases in prices for materials for the subcontractors might not have any impact. “Even though copper wire might go down 2 percent, it isn’t going to affect a general contractor on a job.”

Many factors can affect the market.

“Material pricing can make a difference in some areas, but the impact varies across the state,” said Shannon Coker, executive vice president of Home Builders Association of Mississippi.

“Also, the material costs are not the same across the board. Some prices will increase while others are coming down. There are many moving parts, but the housing market is seeing some growth in our state. “

Scott Shoemaker, president of Shoemaker Homes, Ridgeland, said he hasn’t seen any decline in the cost of materials.

“If anything, everything continues to go up,” Shoemaker said.

“Some of the big players in concrete have had two huge increases in the past two years. Drywall continues to go up and lumber hasn’t been going down by any means. It may have stabilized, but it hasn’t gone down. Labor costs continue to go up, as well. It is getting tougher. Buildings prices have gone up. It has been an increase I’ve seen, not a decrease.”

However, that is offset by a good market for new home sales.

“The market has been good,” Shoemaker said.

“People are buying. Rankin and Madison counties have a lot of activity. People are still wanting new homes.”

Jeff Hinton, Hinton Homes, Pascagoula, also said it is news to him that prices have gone down. Like the others, he has seen concrete go up in price. He thinks he might be starting to see a gradual decrease in other materials.

“It hasn’t really hit yet,” Hinton said. “I think it has been fluctuating back and forth. It has not been any less expensive to build a home than in the past.

“Homebuilding activity has been good. It has been picking up over the past year. The demand for new homes is primarily north of 1-10. Interest rates are still low for now. If building materials drop, that would be good for people.”

Jay Callegari, inventory control manager, Home Town Lumber in Ocean Springs, also said he would like to know where the information is coming from indicating a decline in construction material.

“I look at it every day and I would like to know where I can get this drop because it isn’t happening here,” Callegari said.

“It is steady right at the moment. Lumber fluctuates every few days — it is constantly up and down — but there have been no big changes in either direction in at least the past six month. I haven’t seen anything that indicates it is going to go down.

“You would think lower gas prices should help some because of freight, but I don’t know if it really is.”

On the other end of the state, David Grant, owner of Grant Homes, Southaven, expressed similar sentiments.

“We’re not seeing the drop in cost,” Grant said.

“It has been flat for a couple of years, but it has not gone down any. The overall cost of the house is not reducing. You are seeing pressure on labor rates, but commodities have been relatively flat.”

Grant said despite no significant declines in construction materials, the Southaven area has strong home building and sales activity that he attributes to competitive prices and strong school districts.

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