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Construction Cost Trends—September 2018

BNi Building News

Posted: September 12, 2018 | Cost Trends

BNi Building News Construction Costs September/October 2018

Source: US Department of Labor, Producer Price Index

Construction spending is up since the last issue of Design Cost Data and grew 6% over last year – the hot economy is probably fueling the increases. Home prices are moving upward but with some signs of price resistance. Commercial construction is still doing well across the board with two small sectors in double-digit growth. Although we are guarded in our optimism, we continue to experience good times.

 Construction Materials

Lumber is still the only major product that is still on a tear, with gains of 12% this year. This alone seems to driving the materials index to gains of 4–5 %. We were waiting to see if the upcoming trade wars will affect construction materials and have noticed that the price of steel is inching up, so it’s something to watch for. Inflation remains low. Oil and petroleum products seem to be on a sustained roller coaster ride and are very hard to predict – at time of publication they are down.

 Rubber and Rubber Products

After two flat years in 2012–2013, up 2% in both 2014 and 2015 and down in 2016, rubber is now considerably up for the year with increases in the 6% range. It’s still hard for us to tie this material to other commodities and it seems to have no relationship with any other construction material, at one point we thought it might mirror petroleum products – but that didn’t pan out.

 Sand and Gravel

Sand and gravel seem to be following the fortunes of commercial construction as a whole. At one time we thought that the price of fuel had some bearing on the price of sand and gravel, but we were wrong. Take a look at the chart and see that since 2013 the price of sand and gravel has been growing at a sustained rate of 3–4%.

 Millwork

Millwork had been on a steady sustained rise in spite of roller coaster rides in the price of wood products. Following the housing upturn and an up-tick in commercial construction, millwork had been outpacing all of the other construction materials/components, but it now seems to be following its own steady path. Millwork is up 7% in the last 12 months.

 Clay and Ceramic

Clay and ceramic products were moving up at a very slow rate of 1%. They seemed to have leveled off in 2017 and now are breaking out with increases in the 3% range. After having been flat to down for an extended period, clay and ceramic have both moved up with considerable increases.

Limestone

After seven years of flat prices, limestone moved up with increases of 2–3% in 2013. It then flattened out and seemed to be developing into an extremely stable component trading in a very tight range. Now that it’s up 2–3% for 2018, we may be seeing a movement in the price of limestone which mirrors the growth of the construction industry.

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