Despite headwinds, construction demand is expected to remain strong for the near term. Although the possibility of an economic downturn should be taken seriously, considerable pent-up demand for new construction—including a nationwide housing shortage— and government infrastructure projects should largely sustain activity.
The market price of lumber reached a recent peak of $1,464 on March 3 before declining through mid-April. However, the price has plummeted since then, closing at $573 on June 8th.
The labor market has outpaced the material and equipment markets. 98% of labor costs increased over the last year. When looking at year-over-year costs, 93% of the construction materials, equipment and labor rates changed in cost.
The first week of March saw the IHS Markit Materials Price Index (MPI) jump by 8% – the highest on record. This is primarily due to energy costs, which have jumped by almost 22% in the same period. Discover the latest material prices for you and your clients.
In this economic climate, we have found it increasingly important to have knowledge of the current state of construction escalation for both materials and labor. And since we couldn't find an all-encompassing free source, we created one.
"These past few years have completely changed the way our industry is doing business. Employees are working remotely, we're fabricating off-site, escalation is effecting all aspects of a development. So, how do we adapt to a changing industry?"
"In 2008, I started Paragon. At the time I was working for a major construction firm and felt the industry was losing its way. We lost our integrity, our ability to collaborate, and our top-down communication on projects. When the recession hit, we committed ourselves to our core values so that we could turnaround broken projects, develop trusting relationships with our clients, and mend the wounds of our industry..."
"Let’s be honest. Somewhere along the line, our industry was left behind in the technological push of the last decade. If the construction industry was truly dedicated to our clients, we would be consistently incorporating state of the art technology to make sure we are providing as many solutions as possible..."
"Could the lack of trades and craftspeople this bring on the next real estate recession? I honestly believe it will. So how do we turn the tide of this inevitable tsunami? Perhaps we could stop the impending recession in its tracks by bringing respect and pride back to the trades and crafts industries..."
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