Katrina May Push Up Costs

A story by reporter Kevin G. Hall of Knight Ridder Newspapers looks at how the devastation of Hurricane Katrina might impact the cost of building materials:

WASHINGTON - Hurricane Katrina devastated the Gulf Coast with such force that reconstruction is likely to have no parallel in American history.

To make matters worse, already tight markets and high prices for construction materials will make reconstruction costlier, experts said.

The natural disaster comes as the nation is experiencing a housing boom. Strong economic growth in the United States, Canada and China is making many construction materials, including concrete and steel, scarce and prices high.

Concrete prices have risen 14.5 percent over the past year, according to the Labor Department's Producer Price Index. Less formal measurements suggest that concrete prices in some regions have risen by 30 percent.

The Portland Cement Association, which represents cement companies, and Associated General Contractors of America, representing builders and contractors, estimate that 32 states and the District of Columbia experienced shortages of concrete during July.

Rebuilding the Gulf Coast states could drive construction costs even higher.

"To say it won't have an impact is naive because we are already in a tight market for a lot of these commodities," said Bradley Sant, an American Road & Transportation Builders Association vice president.

Read the entire story at this link.

— The Boy in the Big Housing Bubble