Construction Labor & Material Costs: Current Pricing Trends
Construction cost trends can have a huge effect on contractors, subs, and owners. From material costs to equipment fees, price changes can occur quickly. Because of this, it’s very important that construction companies stay on top of any price changes or forecasts. Overnight, your profit margins can can disappear.
In this article, we will look at current pricing trends within the industry and future predictions.
In the last two years, we have seen a steady increase in the cost of many different materials. The biggest increases were seen in concrete block, ready-mix concrete, precast products, flat glass, and gypsum. Paving showed increases month to month at 0.9% but was down overall.
To optimize profits and prepare for the future market, it is important that you look forward. Predicting future trends will help your business stay on top of any changes.
Overall, construction costs are expected to continue to grow about 2-3% through the end of 2017. Most of these increased costs will be due to rising labor wages. With the plethora of labor shortages within the construction industry, higher wages will help attract new workers. Material costs are also expected to grow about 2-3%. Some of the most significant material costs increases are within softwood products, with huge jumps in softwood lumber.
While some costs are expected to rise, there are also many materials that are expected to stay more stagnant. While gypsum and ready-mix concrete prices have risen, they are small increases at around 0.2%. In the past, gypsum experienced steep price hikes at the beginning of each year in 2012, 2013, and 2014. Since then, gypsum has experienced much smaller increases indicating better price stability. Equipment is also expected to remain flat with very little growth predicted.
So, why are there so many increases?
Besides normal inflation, there are many reasons for price increases. The biggest reason for increases in softwood products is because of the current dispute between the U.S. and Canada. This dispute threatens prices because of higher tariffs that can be imposed by Canada.
Trump has also been seen as a trigger for price hikes. One of Trumps biggest platforms was to keep business in America. This means limiting imports which have caused steel mills to increase prices.
These reasons are only a few of the several factors that have led to construction cost increases. While you can’t change the market, staying up-to-date on construction news will keep you informed and prepared for whatever the industry throws at you.