You are not logged in

DCD Design Cost Data

The #1 Industry Source for Actual Square Foot Cost Data


Construction Cost Trends—May 2016

Posted: May 25, 2016 | Cost Trends

Source: US Department of Labor, Producer Price Index

Construction is going strong, with both the private and public sec­tors 9-11% ahead of last year. The equilibrium between these two sectors bodes well for our industry and seems to be sustainable for the near future. Money is cheap right now so everyone who was going to build something senses that the financing aspect won’t get much better. Home prices are moving upward, 30-year mortgages are at an extremely favorable low, and first time buyers are jumping in to help fuel the market. As a result, housing starts are good – but as we’ve stated before – not like ten years ago. Still, it’s good time to be in the industry

CONSTRUCTION MATERIALS

Construction is going strong, with both the private and public sectors 9-11% ahead of last year. The equilibrium between these two sectors bodes well for our industry and seems to be sustainable for the near future. Money is cheap right now so everyone who was going to build something senses that the financing aspect won’t get much better. Home prices are moving upward, 30-year mortgages are at a extremely favorable low, and first time buyers are jumping in to help fuel the market. As a result, housing starts are good - but as we’ve stated before - not like ten years ago. Still, it’s good time to be in the industry.

STAINLESS STEEL

Last year we thought that stainless steel had found its floor, after losing 25% of its value. Hopefully, now it has indeed found its low. After the lofty highs of 2011-2012, and slides since then, stainless has flattened out and may have found a level. The uncertainty in the iron ore industry may pro­duce downward pressures, but we think that this component may have bottomed out and will start to behave in a more orderly fashion. Stainless is now equal in price to what it was ten years ago.

CARPET

Same story, just a year later. After registering increases two years ago, carpet sputtered and is showing no increase for this year. Carpet seems to follow a path of its own and doesn’t seem to relay on the fortunes of the construction industry.

COMMON BRICK

After being up 4% last year this component of construction has leveled out with gains of just 1%. While it is still down from 2008 levels, brick is making a comeback and may catch up to 2008 in the near future.

PAINT

After considerable price increases in 2010-2012, paint is now selling in a tight range and seems to be stabilizing and may have flattened out. There doesn’t seem to be any reason why the price is moderating, except that after the large increases two years ago the market for paint might just have caught up with itself. Some of the flatness may be caused by the price of oil, so we’ll see if petroleum has anything to do with it.

COPPER

Housing is up, framing lumber is up, and plywood is down 2%; so much for supply and demand. The mills are producing enough for the increase in housing starts, but right now plywood is showing weakness over the last twelve months. On another front, framing lumber is up 10%, so plywood and lumber seem to have lost their interdependence. For the past two years we predicted that plywood would follow the gains of framing lumber, but that just didn’t happen. Historic interdependencies of commodities change and this is a good example.

Search