How To Combat Construction Material Inflation

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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The headlines make it clear that inflation has risen to a 40-year high, not just in the United States but also in many countries that export construction materials here. In simple terms, inflation is defined as the steady price increase for goods and services. As costs go up, your purchasing power goes down. So how can you combat construction material inflation? There are solid ways you can fight inflation as a contractor or construction company owner. This guide has the information you need.

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How Inflation Affects the Construction Industry

Here’s an example of how inflation affects the construction industry. Say you need lumber for a simple construction project. You’re billed nearly 80% more than you were just two years ago for the same package. Why are construction material prices increasing? There are many reasons. All the costs to harvest the wood have increased, from the wages for the loggers and the fuel for the trucks that haul it to the tariffs, or taxes, to get your order across the border from Canada. At every stage of production, the price has risen, and you pay a higher accumulative price. Supply and demand are always a factor in how inflation affects the construction industry as well. Supply is down on most materials used for construction, but demand is through the roof as home sales have skyrocketed and home renovation and remodeling projects have too.

What is the Inflation Rate of Construction Materials?

The U.S. Bureau of Labor Statistics reports the latest information on the inflation rate of construction materials, and it’s not good news. Building material prices increased by 20.4% from 2021 to 2022, and they have gone up 33% in the months since March 2020. For example, drywall, plaster and other gypsum products went up in price by 20% in the past year but have declined slightly in 2022. In addition, the cost of services in home building, including trade services, transportation, and warehousing, has climbed 15.2% in 2022. Since the start of the COVID-19 pandemic, prices for services have gone up a total of 39%.

Top Construction Materials Affected by Inflation

It’s not likely that construction material costs will go down in 2022 from the past year. As you well know, virtually everything costs more in construction now. If you’re wondering about the inflation rate for construction materials, it varies by type of material. Here are the details on several top construction materials affected by inflation. Data is from the Producer Price Index or PPI, home improvement organizations, the U.S. Bureau of Labor Statistics and the Associated General Contractors of America.


Concrete foundations and flooring have been affected by inflation. All concrete products have steadily gone up in price since 2020. Overall, prices are up more than 11%, especially for concrete blocks, bricks and ready-mix concrete.


Lumber has been hit hard by supply chain issues and labor shortages. High tariffs, or taxes on imports, are affecting softwood lumber prices too. By some estimates, the average materials prices of lumber for residential construction have increased by $18,600, resulting from a 79.5% jump in softwood lumber costs since 2020.


The cost of steel has been up more than 74% since 2021 due to inflation and other factors. Fortunately for framing and roofs, steel is one building material that has gone down in price slightly for several months during 2022.


Paint costs rose steadily from 2020 to 2021 but have remained fairly stable for months in 2022. That’s good news considering that exterior paint costs 30% more and interior paint costs 21% more than they did in 2020.

Hardware and Tools

Building hardware and tools cost nearly 9% more in 2022 than in 2021. This includes everything from nuts and bolts to basic construction tools, machinery and supplies.

Finance Your Construction Materials

Improve Cashflow, bid on bigger projects, and get control of material financing. Get started in 5 minutes. Same-day funding. 120-Day Payment Terms.

Ways to Combat Construction Materials Inflation

Following are several ways you can combat construction materials inflation. Depending on your specialty and experience in the construction industry, you may be looking for short-term solutions, or you may be seeking options that will allow you to pursue long-range goals of growing your construction business. Take a look at these ways you can use now to overcome the effects of inflation on your construction jobs.

Combine Construction Projects

One approach to combat construction materials inflation is to combine construction projects. There are several benefits to combining construction projects, but most importantly, it can save both time and money. For starters, it allows you to coordinate better between contractors and subcontractors to manage crews more efficiently. That means the projects can cost less in the end. Furthermore, combining construction projects allows construction workers to complete projects more quickly. You may also get discounts from suppliers if you are ordering more supplies and materials for combined construction projects.

Buy Materials at Better Prices with Pre-Negotiated Payment Terms

Have you thought about buying materials at better prices with pre-negotiated payment terms? It’s possible with Billd. With their cash flow solutions, you can get materials as needed for jobs and then pay Billd back with 120-day payment terms. Billd fits into your purchase process and removes the pain contractors like yourself face. And there are no monthly minimums. Moreover, Billd offers fast, same-day approvals and same-day payment for materials. If you are a contractor or own a construction company, it’s easy to enroll for free in Billd programs.

Seek Out Alternative Construction Materials

Considering the high cost of materials for all aspects of construction jobs, consider seeking out alternative construction materials. Are there recycled materials and supplies you can use versus getting new materials for the job? For example, composite decking material could replace softwood lumber in some cases. Concrete sheeting, reclaimed wood, used bricks and stone veneers are just a few examples of effective alternative construction materials you can use. 

Implement Lean Construction

One potential way to combat construction material inflation is to implement lean construction. With lean construction, you plan and build in phases rather than work with a thorough plan from the start. Lean construction gives you options to change the plans based on how inflation is affecting construction costs. Planning, estimating, budgeting and building can be more flexible. Lean construction opens the door to more communication between all parties involved, from the owner to the material suppliers to the general contractor to the subcontractors.

Amend Your Budget and Increase Cash Flow

Other ways to combat construction materials inflation are to amend your budget and increase cash flow. If high costs are preventing you from paying cash for materials, a partner like Billd might be what you’re looking for. They can help you turn 30-day terms into 120 days. How it works is that Billd pays your supplier immediately, and you pay Billd over the longer term. It’s an easy solution to help you manage your budget and increase cash flow. Get started with Billd.

Get Rid of Procurement Barriers

To maximize efficiency with construction jobs during peak inflation, you need to do what you can to get rid of procurement barriers. You may wonder how you can be even more strategic than you already are when it comes to acquiring goods and services while coping with inflation and supply chain issues, and that’s a good question. You can turn to a reputable source for procurement resources with Billd. They understand the procurement barriers contractors like yourself face and can help you manage those issues while taking control of building your business.

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