Construction Material Costs Now Stonewalling Projects

Prices keep going up, up, up. Fifty-six percent of apartment development firms report delays due to the phenomenon.

Source : Pxhere

June 14, 2021

Author : Alex Bustillos

It’s no secret that construction material prices are sky-high pretty much across the board. Be it plastics, lumber, steel, asphalt, roofing, piping, wallboard, insulation, or cement, Contractor News and other publications have been reporting on coronavirus-related price surges for some time now.

"Pretty much you name it, it is going up in price — sometimes to record levels," Associated General Contractors of America (AGC) Chief Economist Ken Simonson said, according to a new article in BisNow. "I've been AGC's chief economist for almost 20 years and have never seen so many things go up so frequently and steeply at one time."

The outlet notes that lumber and plywood prices shot up 86 percent from April 2020 to April 2021; steel mill products 67 percent; copper and brass mill products 49 percent.

According to AGC, general contractors are spending 19 percent more on purchases.

These price increases, which seem to have only gotten worse in the past few months, are starting to take an even more serious toll on projects. BisNow notes that the National Multifamily Housing Council (NMHC) surveyed 109 apartment development firms and a whopping 56 percent of them have reported delays in construction specifically due to material costs. That figure is up from 30 percent in their last survey from March.

"Our results show a jump in delays caused by economical infeasibility since our last survey," NMHC leaders said. "It’s clear that any delay in getting materials could mean a delay in actually finishing a project if a substitute can’t be found."

Supply chain disruptions caused by the coronavirus have hit every country in the world, but for us here in the United States, disruptions in China, Canada, at home have been felt acutely. Couple that with tariffs, which organizations like AGC have been pushing the Biden Administration to drop, and we’ve got a problem that is truly unprecedented.

Moreover, demand is sky high for this kind of stuff, with more people moving out of cities, having new homes built, or dipping into their piggy banks to have additions constructed for their homes.

“The President could provide immediate relief from soaring prices for lumber, steel and aluminum by removing harmful tariffs and quotas. Unfortunately, the President’s recommendations ignore that quick and effective approach,” the organization said in a recent press release.

The group has been petitioning the White House directly. "We sent a letter in February, highlighting the lumber tariff and the problem it is causing not just for contractors but for the administration's goals for affordable housing and infrastructure," Simonson, AGC’s chief economist, said.

"Contractors can't afford to absorb all of these increases, so they will either withdraw from the market, or some may actually go out of business, or they will find owners who are willing to pay more in order to get a project done,” he added.

Category : Market Watch Material Costs

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