FM Cost Trends

Nov. 20, 2014

Construction Materials Costs.

Depending on the market, construction spending is up 5 to 10%. Multifamily is still growing at a good clip along with hotels/motels. Housing is showing growth in some key markets, but on a national basis it is starting to sputter. Public construction is inching its way back now that tax bases are growing. Overall, look for sustained growth over the fourth quarter as long as the stock market doesn’t have a negative impact.

Construction material costs are now mixed. Lumber and concrete are up while steel and pipe products (plastic and copper) are down. Lumber is headed into a 7–9% increase for the year and steel and copper down to 2–3% decrease. China’s soft economy is probably the main reason for the downturn in metals, while the increase in lumber and cement products are probably the result of a stronger domestic market.

Just like last year, adhesives and sealants are trading in a narrow range. For the most recent quarter they are down. They seem to have a relationship to the price of oil, which is also down for this quarter. This year wood siding has caught up to other wood products and has registered gains of almost 20%. After being up in 2013, fiber optic cable has now been flat for the last 12 months. Since its peak in 2004, fiber optic cable has decreased in price by almost 10%. Mostly flat since the housing collapse, granite seems to be catching up and prices have increased more than 6% for the year. Vinyl floor covering prices remain flat.

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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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