The more you know, the better off you and your business will be.
There are some industry professionals that say the idea of “rising material costs” is just talk; a tactic, if you will, used to get a bigger sale.
But if you look at national averages year over year, the construction industry has seen a pretty dramatic rise in material costs this year alone. The Bureau of Labor Statistics reported that from February 2016 to February 2017 there was a 4.6% rise in material prices.
Why is that small percentage so significant?
Because it comes after a 2.7% cost decrease in 2016 and a 3.5% decrease in 2015. As a member of the construction industry, it’s important to understand what exactly this rise in price means for your business.
First, keep this in mind: If you are feeling the sting of these rising costs, know you are not alone. Constructiondive.com wrote that industry experts’ most common concerns in 2017 have been due to material costs increases.
One of those concerns specifically being over the cost of lumber and how the loss of an agreement with Canada will impact itKen Simonson, chief economist for the Associated General Contractors of America, said in the Construction Dive article: “I have heard homebuilders are concerned about what’s happening with lumber. Because of no agreement with Canada, there is a threat of much higher tariffs.”
Steel is another sector that seems to be taking a hit. Construction Dive said that following the election and Trump’s promise to “make America great again” by limiting imports, steel mils have started to increase prices.
Rebar costs specifically are on the rise, and if they continue developers across the country may decide to stall or stop projects altogether until prices drop. Kimberly Corwin, President and CEO of Connecticut-based A.H. Harris & Sons, told Construction Dive rebar has been their biggest battle with prices going up 30% year-over-year.
As demand increases, so do costs
Despite all of this, the outlook for the rest of 2017 doesn’t look quite as bleak. Simonson said he doesn’t anticipate higher spikes the rest of the year, only between 2% and 4%. Corwin explained that those increases would be due to demand – as demand increases, so do costs.
Remember to always read up on your industry news to continue keeping tabs on these material costs. The more you know, the better off you and your business will be.
