BNi Construction Costs September 2022
Posted: September 23, 2022 | Cost Trends
Source: US Department of Labor, Producer Price Index
The housing market is slowing as rising mortgage rates contribute to reduced affordability. In most markets prices are down or headed down. Meanwhile, commercial continues its comeback and infrastructure is on the way up. Inflation continues to rage, with a new culprit every month. Right now it's asphalt and gypsum. Lumber is flat and not nearly as volatile as last year. Steel is moderating, with supply side issues starting to be solved. Oil remains a problem even though prices are slackening.
Material prices are up considerably. The overall increase remains in the 25 to 30% range with some wild surges both upward and now downward. Some items are stable and some wildly up, it's really time to watch prices more than ever. Bottlenecks were making steel delivery from foreign producers difficult to impossible, but that is starting to change and coupled with a slight reduction in demand we're seeing steel coming down. Conversely, gypsum and asphalt are up 15%.
Brick is up 9% over the last year. Historically, brick was somewhat stable with average increases of 1 to 1.5%. But in the last 24 months brick is up considerably compared to the previous 5 years when the increases were no more than 2% per year. Maybe a reduced residential demand will affect brick's trajectory.
Last report, gypsum was on a tear. The last two years averaged a 20% increase per year. We just don’t know right now what the future holds, but a quick look at the graph tells us that the ride may not be quite over yet.
Steel was down 1.5% just eighteen months ago, then posted gains of 33% last year. Prices remain at record highs but seem to be leveling off. The delivery of foreign produced steel has started to resume, putting downward pressure on prices here in the U.S. The increase year over year is now 15% and lately seems to be waning.
Lumber had been on a wild ride with gains of over 80%. It has since leveled off, dropped 25% and staged a mild comeback, but remains 2% below last year. One note: lumber is still exceedingly high and may remain there for the near future. This is still one to watch and pretty hard to predict.
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