Uneven Construction Produces Unchanging Costs

09/01/2014 |

How are building materials trading?

Commercial and public construction are mixed. Public is down from last year while commercial is up. Office vacancy is now at 20% nationwide, which should dampen contstruction. Corporate America is still amassing cash and until they start spending it, construction will continue on a lethargic path.

Construction material costs are rising slightly at 1% for the year. Steel is down but lumber and cement prices are up about 3% from last year. Copper and precious metals are down for the second straight year, so there may be an adjustment. Even though it seems that inflation has gone away, expect significant increases in individual commodity prices – some are up over 8% this year.

Following a somewhat flat year in 2013, the price of rubber products has ramped up slightly by 2%. After moderating in 2013 with gains of 1-2%, sand and gravel started to climb upward with gains close to 5%, which is its average over the last 10 years. We now see millwork prices outpacing the rest of the components slightly, with increases in the range of 3-4%. Following the increasing price of lumber, millwork is now up about the same as last year, but still below 2012’s rate of 4-5%.

Clay products have been trading in a very tight range for three years now. They are leaning down since last year and have remained flat over the last six years. An improved public works sector would positively affect this commodity. After six years of flat prices, limestone moved up with increases of 2-3% in 2013 but has since flattened again, showing extremely stable pace.

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