While Q4 2024 is exhibiting stabilization in many material prices, challenges persist due to economic factors

The latest Q4 2024 Gordian Quarterly Construction Insights Report reveals that pricing has stabilized for many materials. However, there’s more to the story. The report reveals that infrastructure and supply chain vulnerabilities should be top of mind going into 2025, and factors such as inflation, high interest rates, and the labor shortage are still exerting pressure.

Global events and their effects

The result of disruptive weather events resulted in transportation issues, particularly around manufacturing hubs in the Carolinas. Global economics are also shaping the demand for specific materials abroad, and certain U.S. regulatory changes are impacting the manufacturing sector. Specifically:

• China’s stimulus initiatives have increased demand for metals, and when combined with higher shipping and importation costs, are expected to create a degree of volatility for copper and steel.
• The hurricanes experienced in the Southeastern U.S. affected availability of steel and drywall, as well as creating challenges in the availability of labor and equipment.
• Speaking of labor shortages, these continue to pose a difficult obstacle, with wages for skilled labor going up due to demand exceeding supply.
• The U.S. Environmental Protection Agency (EPA) is in the process of phasing out R-410 refrigerant HVAC systems by 2025, which will necessitate increased costs for A2L refrigerants and the new systems required for them.
• Geopolitical issues in material-rich regions such as Eastern Europe and the Middle East have the potential to affect the supply of steel and copper.

Pricing trends by commodity

Pricing trends are looking better overall, with many of them holding steady or slightly declining:

• Framing lumber is trending lower in the Midwest due to the available timber species and the proximity to Canadian suppliers.
• Structural steel is being impacted by tariffs on imported material. However, recycling and the use of scrap steel are mitigating that, with an overall downward trend this year.
• Concrete block prices have been rising steadily, due in part to high energy and transportation costs.
• The price of conduit has remained fairly steady over the past 18 months.
• Copper electric wire prices spiked in Q3, and while increasing in Q4, only slightly so.
• Fiberglass insulation is volatile, with the price spike seen in Q3 moderating somewhat in Q4.

Analysis by commodity since Q3:

• Increasing: Concrete block; copper electric wire
• Decreasing: Structural steel; fiberglass insulation
• Stabilizing: Framing lumber; conduit

Looking ahead

• Structural steel is expected to decrease in pricing in 2025, although analysts predict there may be a brief price increase early in the year.
• It’s expected that the demand for public infrastructure project materials will compensate for the slowdown in private construction.
• Skilled labor shortages are likely to continue, particularly in regions with high demand, such as those benefiting from federally funded projects.

For a complete analysis of Q4 2024 pricing and predictions for 2025, be sure to download the full Quarterly Construction Cost Insights Report here.