BNi Building News Construction Costs 2024
Posted: December 29, 2023 | Cost Trends
Source: US Department of Labor, Producer Price Index
The housing market is still down but showing some signs of a rebound in the next 24 months. Once interest rates start coming down watch for a pent up demand to fuel the market. Overall housing is down 8 to 10%. Commercial construction continues to be another story, with virtually all sectors up in double digits. Hotels and manufacturing are leading, with increases of 25% and 75%, respectively. Clearly, the infrastructure program is really kicking in. Contractors and designers are reporting backlogs – this is a good time to be in construction.
Material prices are both up and down, but inflation seems to be ebbing. The one sticking point is that even though we see price stabilization and not so much runaway inflation, we also notice that the massive price increases seem to have "stuck". While we don't wish for deflation, we also see the need for price stabilization. Oil was moving in a downward direction but now seems to have found a home in the mid $70 range, prompting us to continue watching material prices. The labor market is also a concern
SAND & GRAVEL
For the past ten years sand and gravel moved steadily upward. We saw a softening in 2020 and a dramatic upturn in the fall of 2021. Last year, because of the volatility of oil, sand & gravel took off early but then slowed down. This year we’re seeing dramatically different numbers. It may be due to the regional aspect of quarries, but some reporting agencies see gains of 30% and some just 2%. So check your regional suppliers. This is one to watch.
Same story, just a year later: Concrete was following a consistent pattern since late 2020. The yearly increases have been 8% in a steady fashion, unlike its components which can fluctuate widely. Recent increases have been in the 6 percent range, not as dramatic as the rest of the pack but still significant.
The cost of plumbing fixtures was on a tear last year and has caught up to the rest of the market. Over the last 3 years it registered gains of 5% but it is now flat. The Covid pandemic created a boom in home improvements, and that probably fueled the rise.
CONCRETE BLOCK (CMU)
After steady 8 to 10% increases over the last 5 years we now see concrete block stabilizing at the 3% level. We don’t see much of a change for the next 6 months.
Always the target of inflation watchers, copper had not followed the increases of other construction components. China does not seem to be coming back and the spot price for copper is well below $4 a pound, which seems to have a direct bearing on wire. Copper wire is down 2% for the year.