Experts see construction material prices stabilizing in 2024
By Gordian
Gordian’s Q1 2024 Quarterly Construction Cost Insights Report brings good news on construction material prices: Although there are some materials whose prices have continued to show volatility, costs at a macro level are returning to a level of stability, suggesting predictable historical price escalation factors.
The Q1 2024 Gordian data analysis focuses primarily on:
- Fiberglass insulation
- Structural steel
- Framing lumber
- Copper electric wire
- Concrete block
- Conduit
Ups and downs of the construction material prices
As the interest in eco-friendly materials increases, the construction industry is taking note, developing products to meet the demand of green building certification. One such product has been significantly affected by this trend: fiberglass insulation. The high demand for it is discussed in depth in this report, a demand which continues unabated from previous quarters. Since Q2 2021, the price for blanket fiberglass material has nearly doubled. In addition to the movement toward energy efficiency in residential construction, Gordian attributes this to a boom in the home building market; greater government regulation for home insulation; and the lingering effects of COVID-19 on manufacturing.
Copper electric wire now remains steady from Q4 2023, exhibiting a slight decrease year-over-year. Price increases in the latter half of 2022 were driven by the shutdown of operations in copper mines in Peru and Panama, although it’s not known at this time if mining will resume.
Gordian also reports a significant downward trend in the cost of drywall. Post-pandemic, per-square-foot prices have dropped 11 percent from their highest point, seen less than just a year ago. Over the course of the past year, framing lumber has also seen a major decline in cost of nearly 19 percent.
Be prepared for construction material price variability
The experts say that while they expect improved pricing predictability at a high level for the balance of 2024, materials costs will each exhibit their own degree of variability based on a number of different factors. They advise that preparation is key, including analysis of localized cost trends while project planning. The full Gordian report contains a city cost index overview, including pricing changes between Q4 2023 and Q1 2024 for numerous major metropolitan areas in the U.S. and Canada. In the western U.S., for example, overall prices are trending toward a modest increase, but the variability does not seem tightly tied to geography alone.
With the pandemic behind us, a gradual stabilization is expected in 2024. However, raw materials shortages, weather events, and geopolitical unrest all introduce a level of unpredictability, and construction professionals are advised to keep an eye on the supply chain.