Those driveways being poured right now in new housing developments are not only a sign that home builders are rushing to get work done before winter comes, but also that the cost of construction materials such as concrete are inching higher all the time.

An Oct. 25 report from the Associated General Contractors of American said construction material costs climbed about 11 percent during the 12 months that ended this September. And prices are still increasing as a result of hurricanes that hit the South this fall and damaged supplies of construction inputs ranging from diesel fuel to cement.

“We really haven’t felt the price increases too much yet, but it is coming,” said Randy Walters, president of Oaks Development Co., a residential and commercial builder in Des Moines. “We’re getting notices on a daily basis that any building product that is petroleum-based, such as pipes and shingles, that those products are going up. The price increases are anywhere from 5 to 15 percent, effective immediately.”

Other Central Iowans in the building industry are also feeling the pressures of price increases for building materials. Some are affected by the higher costs more quickly than others because of their role in the distribution process of those materials.

Waukee-based Gilcrest/Jewett Lumber Co. carries both lumber and manufactured products such as siding, carpeting and windows for the building industry. Although the lumber market appears to finally be stabilizing after a rocky year in 2004, prices for some of the manufactured items are now climbing, according to Sumner Worth, the company’s president.

“We are having to adjust pricing for customers,” Worth said. “It’s just too big of an increase for us to not pass on.”

Hurricanes Katrina and Rita damaged some chemical production plants and oil refineries along the Gulf Coast, thereby reducing the supplies of products used to manufacture many construction materials. According to the analysis of construction costs from the AGC, as of late October, the majority of Gulf of Mexico crude oil and natural gas production was still down, “assuring that construction materials that use oil or natural gas as a feedstock would be much higher-priced, at least through the winter heating season, than if the storms had not occurred.”

Gary Scrutchfield, the general manager of Lumbermans Wholesale Co. in Des Moines, said he has noticed major increases recently in the cost of shingles because significant amounts of petroleum are used to manufacture them.

“We had a price increase in September and then again Nov. 1,” Scrutchfield said. “It’s unusual to see materials costs increase going into winter.”

Another factor driving up material costs is higher transportation costs, Scrutchfield said. High diesel fuel prices since 2004 have forced trucking companies to impose fuel surcharges on its customers, and that additional cost has been factored into the selling price for materials whenever possible.

Scrutchfield said he recently paid a fuel surcharge of $200 to have materials delivered from Denver to Des Moines, on top of the $1,100 freight rate he normally pays.

“Transportation costs have a direct impact on our cost of goods,” he said. “In some cases we can pass the surcharge on to our customers and in others we can’t. If you’ve already coordinated with your client for materials to be delivered at a certain price, sometimes you have to eat the additional cost.”

But even finding a trucking company to deliver materials can now be a challenge, Scrutchfield said, because many truck drivers have been hired by the government to deliver supplies and materials to hurricane-damaged areas of the South. As many businesses compete to hire a limited amount of available drivers, the highest bidder wins.

“I recently needed four loads of materials in Indiana here in relatively short order,” he said. “I called 13 different trucking companies to see if they would pick it up, and they were all full. I had to wait on the materials, which didn’t make my customer happy because there was a deadline to meet.”

Though building supply dealers such as Worth and Scrutchfield are affected almost immediately by higher construction material costs, builders historically haven’t felt the increases as quickly because they lock in prices with subcontractors at the onset of a project. But some suppliers are now changing their policies because they can no longer afford to guarantee prices of materials in such a volatile market.

Dave Hanson, the Des Moines production manager for Triton Homes, said a few subcontractors have recently changed their policies and no longer guarantee prices over an extended period of time.

“Some of the subcontractors we work with have actually gone to quarterly updating of prices,” Hanson said. “Every quarter now, we have to renegotiate with them. It’s only a small percentage of lumberyards and suppliers that are doing it right now, but it could become more common.”

Triton, a 3-year old company based in Ankeny, builds townhouses marketed to first-time home buyer, so the company pays close attention to managing construction costs to keep selling prices affordable. But Hanson said he does not plan to discontinue working with his subcontractors that have implemented quarterly price increases, because he still believes that long-term relationships with subcontractors yields the best pricing.

“We want to have five- to 10-year relationships with each subcontractor we’re using so they know from the beginning that our intention is to do about 1,000 homes with them over the next five years,” he said. “That $5 increase that they’re seeing in their PVC plastic, they’re not going to have to transfer that to us because they’re looking way down the road.”

Hanson said Triton will do everything in its power not to pass on the additional building costs to its buyers.

“We are going to be looking at our own operations for efficiency to keep costs down for our customers,” Hanson said. “The biggest thing I look for at the end of the day is making sure that the home buyer does not have to pay an increase.”

The rule “what goes up must come down” doesn’t always apply to the construction industry. According to the ACG, diesel fuel, gypsum products, copper and brass each had double-digit price increases in 2004 and 2005. The recent volatility in construction costs has even industry veterans in disagreement on what direction material prices will take in the near future.

Worth from Gilcrest/Jewett expects the prices will “find some equilibrium” as access to raw materials returns as damaged factories and ports in the Gulf Coast region are repaired.

But Walters isn’t banking on construction costs going down anytime soon, and he suggests that people who are considering buying a new home in the next year give serious thought to what higher construction costs could mean for home prices.

“It’s a good time to buy a home right now because I would guess that the average home is going to go up 10 percent next year because of the higher cost of materials,” Walters said. “Plus, there’s quite a bit of housing inventory in town and interest rates are inching up a little bit, so I would encourage people to act now.”