FM Cost Trends

June 23, 2015

Housing Starts Are Driving Construction in 2015.

Housing construction is showing gains of 15-20% so far this year. Housing starts are up to more than 1 million (adjusted) and showing signs of sustainable momentum. This bodes well for the rest of the construction industry, which traditionally lags housing activity by two years. Commercial construction should show gains this year in the 5-10% range, with certain segments such as hotels and offices leading the way. Institutional construction is mixed, with schools and hospitals down from last year.

Increases in construction materials prices are moderating. Many economists believe that we are entering a period of soft commodity prices. Currently, overall prices are up about 2% compared to 2014, but not across the board. Labor is up 1.6%.

Sooner or later the price of iron ore affects steel. Prices for hot rolled steel bar have been sliding downward since 2011 and are likely to continue sliding through 2015. Outpacing prices for construction materials generally, concrete block (CMU) is showing increases this year in the 3-4% range. After dipping and flattening out last year, crushed stone prices have turned upward. After lows in 2010, glass has moved consistently with the fortunes of construction. Glass is up 8% over the last 5 years for a consistent average of 1.6% increases annually. Although precast concrete had a price spike in the third quarter of 2014, prices have moderated since then. Gains will likely be in a 2-3% range in 2015.

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