Building Material Costs on the Rise

07/29/2011 |


The AIA has released growth forecasts for 2011-2012, with predicting a decline in nonresidential construction spending for 2011 with improvement expected in 2012.  With the costs of key building materials increasing, the design and construction industry has yet to see a recovery.

“Consumer and business confidence is poor and the overall economy has yet to pull out of the downturn that began in 2008, which both add to the general sense of anxiety and uncertainty in the real estate market” says AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Spending on renovations of existing buildings has remained strong, but the depressed demand for new construction isn’t likely to improve until next year, led by the commercial sector: offices, retail and hotels.”

Baker notes some of the key material costs, “Steel, copper and aluminum have all increased ten percent or more in the past year, offsetting declines for lumber and concrete products. Rising energy costs have also been central to the unusual volatility in building material prices”

A depressed housing market and rising costs of key construction commodities are all contributing to what projects to be a decline of 5.6% in spending this year for nonresidential construction projects. The AIA’s semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, also projects a 6.4% increase of spending in 2012.

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