While Construction Dive reports that “construction costs decrease for first time in ten years,” the Associated Builders and Contractors (ABC) reported last week that its Construction Backlog Indicator rose to 8.1 months in June, an increase of 0.2 months from May’s reading, indicating increased optimism among contractors.
Construction Dive sites the following reasons as to why construction costs are projected to decrease:
- A variety of pandemic-related forces have caused construction costs to decline slightly for the first time in a decade, which could lead contractors to feel a pinch in profits.
- The Turner Building Cost Index, which measures costs in the U.S. nonresidential building construction market, fell to a value of 1177 in the second quarter of 2020, a 1.01% quarterly reduction from the first quarter. This is the first time the index from Turner Construction Co. has reduced in value since 2010.
- “Trade contractor competition has increased in many areas as they work to secure backlog due to uncertainty they have about future opportunities,” said Attilio Rivetti, the Turner vice president responsible for compiling the Cost Index in a press statement.