BUILDINGS - Smarter Facilities Management

03/01/2015

FM Cost Trends

Outlook for Construction and Material Costs

 

Overall, construction will most likely continue on an upward tick for 2015. Housing will be up approximately 6% in 2015 and commercial up about 5%. Public construction is also beginning to show some life.
The prices for construction materials overall increased 2-3% in 2014. Inflation is low and some economists are projecting overall prices to be largely flat in 2015.

After the hefty increases of the last five years, the price of lumber may have ended its upward trajectory. Since 2009 it has posted gains of 40%. Concrete has trended upward since 2009, albeit in a tight range around 3%. Last year, the components of ready mix went in different directions with cement up and stone down, resulting in an increase of 3% for concrete.

Once the component everyone watched, steel is now flat. It is up 2% for 2014, but down 2% since January 2009. Until China gets back to its unprecedented growth – which seems unlikely in the near future – steel will probably rest near its present level. Aluminum spiked to record levels in Q2 of 2011 and then started a downward dive that reversed itself in 2014, when it climbed 12%. Copper continues its fall, showing a price decline of 8% in 2014. Nevertheless, it is still up more than 100% over the last six years though down significantly since 2011. We’ll have to see if demand is there in the coming year, but don’t count on China, whose forecasts for manufacturing are down for the next few quarters.

Note: All data is based on indices rather than unit or quantity prices.
Source: U.S. Department of Labor, Producer Price Index

  
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