BNi Building News Construction Costs November 2022
Posted: November 4, 2022 | Cost Trends
The housing market continues to slow down, offsetting a steady rise in commercial and public works activity. The overall effect translates to modest gains for this quarter. Inflation remains high, and though it seems to be waning it is still at a very high level— so caution is recommended. The labor shortage may be holding back the commercial rise, and the lack of qualified professionals does not seem solvable in the near future. Nevertheless, it’s a good time to feel positive about the future for construction, despite some pitfalls we will have to work around.
Material prices are up considerably but some seem to have leveled off. One thing is clear: the rate of increase is slowing and the aggressive moves by the Fed may be working. Oil has stabilized and the price of fuel has decreased almost a dollar a gallon over the last few months. Materials are more readily available and the supply chains, although fragile, are now being restored. However it’s really time to watch prices more than ever.
When oil was over $100 a barrel and climbing, plastic pipe followed suit. Now that oil is well below $90, plastic pipe’s trajectory is quite similar. Housing is soft, so look for further reductions. Plastic pipe is flat to up slightly this year, while still up considerably for the last five years (80%). There still may be a correction downward later this year.
Plywood continues its roller coaster ride. It is now down 4% for the last year. Despite this drop it is still up 50% over the last five years. Bottom line: this component is far too volatile to predict. We need to keep watching it closely over the next quarter.
Steel pipe finally slowed down after three years of meteoric increases of a combined 100%. After languishing the previous five years, steel pipe took off like a shot and now seems to be leveling off and has remained flat so far this year.
After increases of 18% for the previous year, aluminum has finally slowed down and is registering deceases of 5% for this year. Many believe that the economic downturn in China is the most likely reason. Keep watching.
Once the target of inflation watchers, copper wire now lags most components and remains weak. Copper wire is down 8% for the year and the spot price for copper alone is down over 10%. Unless demand ramps up, we see no dramatic increase on the horizon.