Overall construction starts remained strong in Q3. While on balance material prices are beginning to decline, metal building material prices show no sign of abating.
Overall construction starts remained strong in Q3. While on balance material prices are beginning to decline, metal building material prices show no sign of abating. Lumber prices continue their meteoric trend downwards. However, in the current inflationary environment and with FED rate hikes adding additional pressure to already squeezed budgets the NAHB reports an 8% rise in home building materials prices since the start of 2022. Meaning overall building costs are likely to continue to increase for the remainder of 2022.
Recession fears have some industry experts pointing to a potential downturn in 2023. But the signals are mixed. Single family starts declined 8% while multifamily is up 28%. Non-residential construction starts actually rose 35% year to date with data-centres and public works booming.
It's a similar dichotomy when it comes to material pricing. Insider reports lumber prices are down more than 6% to $829 per 1,000 board feet at the start of this month. While across steel products from rebar to panels the price remains stubbornly high. The average price for ½ in x 10 ft rebar hasn't dropped below $7.15 since mid-July.
While supply chain pressures may be easing in the heavy machines market, prices also remain high. High material prices are actually having unusual consequences here. Used vehicle prices are being impacted by the high value being placed on component materials. Meaning the scrapping of used machines is actually driving the price up, causing a vicious cycle. Though most pundits will tell you, the highs of COVID era prices in this sector may well be over.
For a detailed report with price trends over time make sure to check out Niche SSP's Building Material Prices Report for Q3 2022
Steel - Standard Plate currently sits at an average of $1782 per net ton which is a -1.65% change from the previous quarter but still almost 10% up year on year.
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At $1266 per MSF plywood pricing is down on last quarter and last year, but only by -5.7% & -4.16% respectively.
Asphalt prices remain high year on year, at +36%, though do show signs of levelling off, with only a +1.5% change on the previous quarter. Because the price of Asphalt is closely tied with the crude oil prices, we may not see signs of relief until 2023. And that depends a lot on how world events such as the Russia-Ukraine war continue to play out.
Portland Cement currently mostly sits level at $173 per CY, a -1% drop on the previous quarter. 14% higher than the same time last year.
View the full Building Material Prices Report for Q3 2022 for more detailed information on prices for specific materials over time.
With building material prices rising, expect continued pressure in the short term.
Material prices are showing some signs of easing after a strong few quarters, however, on balance prices are still rising and are not expected to significantly decline in the near future. We may see costs start to come down in 2023 as the market begins to correct, but so much depends on world events, including how the FED & market continues to react.
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