...the Southeast, he notes. During the same period, lumber prices declined 6%. However, plywood prices remain 10% higher than a year ago and 91% higher than 2002’s price level. And lumber prices still are about 40% higher than 2003, according to Random Lengths’ composite prices.

Here to Stay?

Contractors may have to get used to dealing with higher material prices that show no sign of declining soon. "A major decrease in the cost of construction is not in the cards," says Carl Almstead, vice president in charge of putting together the Turner construction cost index (see table p. 24). He expects inflation to continue to climb through the rest of the year, with annual escalation for the Turner index peaking at around 9%. A year ago, the index measured annual inflation at just 0.3%.

The surge in steel prices at the beginning of the year is not softening. "The cost of structural steel has stayed up and we expect the higher price levels to continue because there is no imported steel coming into the market that could drive prices down," says Neil Platt, Turner’s Pittsburgh-based purchasing manager. He notes that steel mills are constantly shifting their price structure between surcharge and base price but overall prices are staying near the record levels set during the first quarter

Cement shortages that developed during the second quarter also are continuing. "Cement is allocated basically everywhere, but it is especially tight in the South," says Platt. He notes that Turner had to "cobble together" a team of ready-mix suppliers on a few big pours because allocations prevented any one firm from meeting the project’s needs.

"We assumed that the shortage situation [for cement] was only going to be for this summer," says Tim Durning, manager of marketing and technology for Grace Construction Products, Cambridge, Mass. "But it looks now like it will be extending into next year."