Construction materials

Linesight: Building material prices stabilize after two years of increases, but energy uncertainty and rising interest rates keep project costs high

NEW YORK–(BUSINESS WIRE)–Global Construction Consulting Company, line of sight today released new data showing that stability may return to the cost of building materials as pandemic-induced volatility declines, but due to factors including high global energy prices, rising interest rates, labor shortages and fuel and freight costs, the reduction in commodity prices will not be felt until early 2023. Q2 revenue report for the United States also shows that tariffs on imported lumber and other materials are keeping costs higher for US builders.

“Over the past two years, the global construction industry has been at the mercy of disrupted and broken supply chains that have made critical materials scarce and led to significant increases in the cost of construction,” said Patrick Ryan, executive vice president of the Americas at Linesight. “The good news is that many of these materials are now more readily available, resulting in material prices stabilizing, but we are not off the hook yet due to high energy costs, labor shortages work and rates that temper the availability of materials and prevent the cost of construction from falling.

Among the key findings of the report are:

  • Lumber prices fell sharply at the start of the summer and are expected to fall 12% by the third quarter due to lower demand from the residential sector. However, Canadian lumber tariffs and low inventories are expected to maintain some upward pressure on prices for the remainder of 2022.

  • Rising energy prices, including oil prices, have pushed up the cost of producing asphalt over the past year, but lower domestic demand will have a dampening effect on asphalt prices. here the first quarter of 2023.

  • The cost of copper fell 12.8% as an indirect result of higher interest rates.

  • Diesel prices are still high but have fallen 8.5% in the last quarter after a major spike in 2021 as crude oil prices soared above $100 a barrel when the Russian dispute broke out -Ukrainian.

One of the main reasons prices are falling is a rise in US interest rates, which has a cascading effect across the industry as fewer projects are approved. Copper and steel prices – which have soared in recent years – appear to be falling as demand declines. At the same time, the cost of asphalt and bricks increased in the second quarter, as did most materials in the second quarter due to a number of geopolitical factors, although Linesight expects prices fall later this year as demand contracts.

Ryan says this discrepancy is the result of a lag between market changes and price swings. “Some products, like lumber, reflect changes almost immediately, while others take a quarter or two to materialize. It is reasonable to assume that by the fourth quarter of this year, we will see a downward trend in the costs of many commodities. »

To request the full report, please visit here.

About Line View

line of sight is a multinational construction consulting firm with over 48 years of experience, providing cost, schedule, program and project management services to a multitude of industries including life sciences, commercial, data centers, high tech industry, residential, hospitality, healthcare and retail. Linesight’s specialized project teams, each with specific skills and experience, provide better predictability of project results, faster project delivery, improved profitability and maximum monetary value for its clients. For more information, please visit http://www.linesight.com.


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