Construction material prices stabilized in the second quarter of 2024, with variations appearing in select building categories. In the 12 months ending June 2024, Construction Materials fell 2.5% overall.
According to construction cost provider Gordian, softening demand caused cold-rolled steel prices to drop considerably in the second quarter of this year. Meanwhile, clay bricks faced a price increase that has not been seen since early 2023.
As a result of supply chain issues stemming from the global pandemic, efforts were made to mitigate future disruptions by relocating manufacturing and distribution facilities closer to markets in North America. This offers better control over supply chains, reduces uncertainty around delivery, and contributes to steadier material pricing, some of which is evident in the latest price stabilizations.
David Corle, Director of the National Hospitality Division at HMI Glass, is looking for the Federal Reserve to cut interest rates to help. “If interest rates were more reasonable again, there would be less focus on material prices because borrowing would be a lot more affordable,” Corle said. He added, “When material prices rise in conjunction with rising interest rates, developers tend to tap the brakes. When developers tap the brakes, our customers’ projects are put on hold.”
David Corle, Director of the National Hospitality Division at HMI Glass. Image courtesy of HMI Glass.
In the present environment, declines in material prices have been somewhat offset by the rising cost of construction labor. Chief Economist at ConstructConnect, Michael Guckes, recently commented, “Falling material prices have helped stabilize construction bid prices despite rising labor costs” (see the ConstructConnect Construction Industry Snapshot). Guckes noted that average hourly construction wages have climbed 4.8% to $38.15 per hour over the past 12-month period ending June 30.
Michael Guckes, Chief Economist, ConstructConnect
Despite a reprieve from the recent pricing volatility, Guckes added, “Upward price pressure for building products remains the trend in specific categories.” For instance, the inflow of data center projects and demand for electric vehicles helped push global prices for a mission-critical metal to 20-year highs in the second quarter.
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