Q3 2024: Construction Materials Update

Currently the construction material pricing market on average, is stable. There are certain sectors that continue to show volatility and significant movement. National average material costs in the U.S. were up 1.0% over the past quarter and only 1.3% in the last 12 months. While this news is welcomed and a relief after years of roller-coaster cost changes, current construction cost are up nearly 40% since February 2020.

Supply Chain challenges still loom with Electrical and HVAC Equipment and some raw material. This fact will continue to drive a constant upswing in pricing without relief in the foreseeable future.

Labor shortages while mostly causing on-site impacts to construction projects, do have an impact on material pricing as well. Staffing manufacturing plants with skilled labor continues to create cost increases. The demand for skilled workers creates a level of competition across the board, resulting higher wage and compensation packages being offered in order to entice workers.

Increases in energy prices continue to impact the cost to produce and distribute construction material and equipment. In July alone energy prices in all major energy subcategories increased. For example, Natural Gas prices jumped 14%, Petroleum surged nearly 6%.

Last but not least, we currently have the highest sustained inflation in the U.S. economy since the early 1980’s according to the Bureau of Labor Statistics. This economic circumstance impacts every facet of construction material, supplies, and equipment.

STEEL

Steel showed some stability through Q3 and Q4 and into Q1 & Q2 2024, now showing steady signs of declining prices by nearly 10% per ton. Construction industry experts believe that price declines are likely to continue.

PLUMBING & PIPING

Plumbing pipe material pricing changes are inconsistent. Galvanized piping is down 2.5% in the last quarter while copper pipe products are up over 3.5%. PVC, ABS, and PEX piping remain stable. The forecasting suggests mild and steady increases mostly attributed to energy costs. The urbanization, infrastructure development and the need for sustainable construction materials remains positive.

In 2024 Plumbing Fixtures have increased approximately 5% annually up $16 billion dollar in this $128 billion dollar industry.

CONCRETE

Ready Mix Concrete (RMC) typical 3000 PSI 3/8 mix has increased 50% per cubic yard since the beginning of 2024. The national average cost per CY Q1 2024 was $127 and is currently $190. Putting this in terms of a standard 9 Cubic Yard truckload, the current cost is approximately $2,300 including tax and delivery with regional cost variations. As opposed to $1,700 at the beginning of 2024. Note: a 9 CY truckload will cover approx. 20’x25’ slab 6” thick or a Round Concrete Column 3’ Dia x 34’ High.

Projections show a continued price trending upwards throughout 2024 due to projections of a strong demand for the rest of the year. Availability of RMC for typical building construction poses no issues.

RMC current average price

$190 per cubic YD

FIBERGLASS & MINERAL WOOL INSULATION

Fiberglass insulation costs were tracked a 25% increase by the end of 2023. After a brief dip in 2024, pricing is still on the rise. These steady increases are due to the increased annual growth rate of 17% from 2024 to 2031. Currently, the market is valued at approximately just under 1-Billion and by 2031 it is expected to reach a value of close to two billion. Increased consumer demand, energy conservation, technology, and wider range of products across various applications is driving this market increase.

ELECTRICAL

Electrical conduit and copper wire prices have leveled off in the last year. Q3 of 2024 shows a recent uptick in pricing for both materials.

Conduit using common EMT, outlook for the remainder of 2024 has a projected consistant and stable pricepoint with gradual increases due to the continued demand and current abundant supply of aluminum used to make EMT Conduit.

Copper Wire showed an initial drop starting off in 2024 however has regained the constant status and is projected to have a moderate rise in cost throughout 2024, so far up 3% this year.

While Conduit and Wire have leveled off, other electrical components are still experiencing significant material price increases, and projected to trend upward. This sector has been impacted most by the new technologies, rise in production of electric vehicles, and increased construction for data centers and to support the AI technology in the U.S.

HVAC EQUIPMENT

HVAC Equipment cost is at an all-time high, and continue to rise. In short, this price level is largely attributed to the new SEER2 changes implemented. What is SEER? Seasonal Energy Efficiency Ratio, measuring the annual energy consumption and efficiency of the HVAC unit cooling ability in typical day-to-day use. Higher SEER ratings indicate more energy-efficient equipment. A 14 to 15 SEER rating is the new minimum. It varies by region of the US. The Department of Energy (DoE) announced the SEER2 updates in 2023.

Other Contributing Factors for HVAC Equipment Price Increases:

·Stringent environmental regulations and requirements on the R410A freon refrigerants. Note the “new” refrigerant being adopted in the US; R454B has been used in Europe for 2+ years.

·Raw material price increases.

·Skilled labor shortages in the manufacturing of HVAC equipment.

·Market demand is increasing for advanced technology driven by growth in the AI sector.

·General inflation impacts.

·Supply chain issues continue to plague this sector of construction.

HVAC Sheet Metal Ducting

HVAC Sheet Metal material has remained stable through Q2 2024. Galvanized G-90 Sheet Steel is currently running $0.85 per LB at a 1%-2% increase pace per month. This HVAC material pricing could increase into Q3 and Q4 as a result of new regulations and standards related to decarbonization.

METAL STUD FRAMING

Metal stud prices started trending downward beginning Q1 of 2024 and continued to spiral downward into the mid-year. Centerline’s direct vendor contact has shared that the main reason for the 2024 drop in pricing was due to the major steel mills, like Nucor, dropping their prices on future orders. These mills raised their prices across the board anticipating a significant demand in January 2024 which never materialized. The demand did not meet the projections. They feel the reduced demand is due to high interest rates coupled with developers’ reservations about the election year economy. Since June, prices have stabilized and our contact projects they will remain the same the remainder of 2024.

COMMERCIAL Roofing

After the first two months of 2024 where roofing supply companies have discounted prices significantly largely due to overstock, prices have now leveled off and are projected to remain steady the remainder of 2024.

Framing Lumber

Framing lumber prices are on the rise again, up 17% in the last 3 months while Plywood and OSB Sheathing shows a 6% decrease in pricing.

The trend this year shows lumber experiencing a significant decrease of 6% to start the year from the end of 2023, and continued to drop into May. However, since May the price increases have steadily risen.

The overall outlook predicts lumber prices are likely to hold throughout 2024 as the demand for lumber products is projected to remain robust, driven by ongoing construction activities and home improvement projects. Home Depot analysts forecast that lumber demand will grow by 1.7 billion board feet in 2024, a 3.4% increase from the previous year and with the U.S. Commerce Department indicating plans to increase tariffs on Canadian softwood lumber from 8.05% to 13.86% in 2024, which will add to higher U.S. prices.

The detailed chart below tracks specific Framing Lumber cost from May 2024 to current:

This Centerline chart shows SPECIFIC pricing for common building lumber materials showing purchase pricing changes over the last 4 months.

drywall & sheet products

Drywall product costs increased 5% for the first two quarters of 2024 and some products reaching all-time highs. Many large manufacturers announced across-the-board increases on all of their wallboard products. After a sharp upward trend in gypsum material products pricing this year, the prices have leveled off and are projected to remain stable through 2024.

Common names for “Drywall” typically meaning the same thing:

Drywall - 2. Wall Board - 3. Sheetrock or “Rock” - 4. Gyp Board or “Gyp”

However, many specific types of Gyp Board are available; type X fire code, regular gyp, moisture resistant, impact resistant, mold resistant.

Other sheet goods (without using gypsum) fall into this family, typically produced by the same Gyp Board manufactures such as Cement Board and Densglass.

[4] Resource center. Gordian. (2024, August 20). https://www.gordian.com/resources/