Readers of this site will note that we regularly discuss lumber prices – namely, how their surge during the COVID-19 pandemic has affected many facets of the US construction industry, from helping to drive up new home prices to potentially altering or delaying home improvement projects. Now, a recent headline indicates that the problem is not just limited to lumber alone.
Prices of all construction materials – lumber, steel, drywall, fasteners, etc. – rose 1.5% in October, the highest such increase since June. Furthermore, in a year-over-year comparison, construction materials prices were more than 20% higher in October of 2021 than they were a year ago. Perhaps more worrisome for construction professionals, prices are expected to continue to climb throughout the rest of the year and into 2022.
While in many respects the construction market has weathered these prices – with new housing remaining strong and homeowner interest in home improvement projects undimmed – there is concern about the effect of high prices among contractors and other industry professionals. Indeed, with inflation affecting many other segments of the US economy – such as high gas prices and more costly groceries – some are wondering if further increases in prices will cause consumers to cancel home improvement projects. It can be difficult to sell homeowners on the value of a $25,000 kitchen renovation, for instance, if they are concerned about their ability to repay this debt. Freedonia experts will continue to monitor the price of construction materials – as well as other products – as the US economy contends with supply chain issues, such as the availability of raw materials and bottlenecks in production and transportation.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.