News

Jan 08, 2024

Building material prices have become the calm in America’s economic storm

Linesight’s latest quarterly report predicts stability

Linesight's latest quarterly report predicts stability (mostly) through the first half of 2023

Commercial and institutional construction spending is projected to be down 6.9 percent and 13 percent, respectively, in 2022, impacted by macroeconomic factors that include increasing demand for long-lead equipment, material shortages caused by supply-chain snags and the Russia-Ukraine war, and the instability of costs for fuel and labor.

That easing of demand has allowed key commodity prices to stabilize, and there is reason for optimism despite uncertainty about the health of the U.S economy that is only expected to expand by 1 percent next year.

This is the perspective of Linesight, a multinational construction consultant, which has released its Third Quarter Commodity Report for the United States. Patrick Ryan, Linesight's Executive Vice President for the Americas, states that the "medium to long-term outlook remains positive, with [economic] growth expected in the coming years as inflation comes under control."

The Report focuses on five key commodities:

•Lumber, whose prices have been on a downward trend since the first quarter. Supply-side fragilities have eased, as post-flood mill inventory in British Columbia is rebuilding.

•Cement and aggregates, whose prices have been affected by oil price turbulence. Linesight sees the slowdown in residential construction as easing pressure on this commodity's demand, although that could also be negated by commercial demand spurred by the Infrastructure Investment and Jobs Act of 2021.

•Concrete blocks and bricks, whose prices are waning along with residential construction demand that is tamped by rising mortgage interest rates.

•Rebar and structural steel, whose prices had flattened during the previous quarter, and whose weakening future demand, especially from China, anticipates falling prices. However, Linesight also cautions that high energy prices continue to drive up steel's production costs.

•Copper, whose price declines of late have stabilized. Supply disruptions and the lack of investment in new mining operations continue to contribute to production shortfalls, and demand remains "resilient," especially as the manufacture of electric vehicle batteries expands.

The Report prognosticates as well about pricing for asphalt, limestone, welded mesh, drywall, and diesel fuel. It also forecasts commodity prices by regions of the country, although the geographic variations are, for the most part, marginal.

Perhaps the most important issue right now affecting commodity prices, says Ryan, is mixed data on the economy. Despite two consecutive quarterly declines, "there are positive indicators being recorded to suggest economic resilience in some key areas," such as the lowest unemployment rate in five decades, and the Federal Reserve's aggressive actions to curb inflation.

Another bright spot is labor productivity in the U.S., which still outpaces Germany, the United Kingdom, Hong Kong, Taiwan, South Korea, and Japan.

The core of recent awareness efforts—and their greatest challenge—is getting workers to come forward and share stories.

Contractor backlogs climbed slightly in April, from a seven-month low the previous month, according to Associated Builders and Contractors.

Roughly one in three office buildings in the largest U.S. cities are well suited to be converted to multifamily residential properties, according to a study by global real estate firm Avison Young. Some 6,206 buildings across 10 U.S. cities present viable opportunities for conversion to residential use.

Lee Frederiksen, Managing Partner, Hinge, reveals key takeaways from the firm's recent High Growth study.

Despite economic headwinds, the multifamily housing market continues to demonstrate resilience, according to a new Yardi Matrix report.

National nonresidential construction spending increased by 0.7% in March, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $997.1 billion for the month.

In the latest United States Construction Pipeline Trend Report from Lodging Econometrics (LE), analysts report that construction pipeline projects in the U.S. continue to increase, standing at 5,545 projects/658,207 rooms at the close of Q1 2023. Up 9% by both projects and rooms year-over-year (YOY); project totals at Q1 ‘23 are just 338 projects, or 5.7%, behind the all-time high of 5,883 projects recorded in Q2 2008.

Proposal activity for architecture, engineering and construction (A/E/C) firms increased significantly in the 1st Quarter of 2023, according to PSMJ's Quarterly Market Forecast (QMF) survey. The predictive measure of the industry's health rebounded to a net plus/minus index (NPMI) of 32.8 in the first three months of the year.

A new Cushman & Wakefield report depicts a "well capitalized" banking industry that is responding assertively to isolated weaknesses, but is also tightening its lending.

Architecture firms reported a modest increase in March billings. This positive news was tempered by a slight decrease in new design contracts according to a new report released today from The American Institute of Architects (AIA). March was the first time since last September in which billings improved.

The core of recent awareness efforts—and their greatest challenge—is getting workers to come forward and share stories.

Contractor backlogs climbed slightly in April, from a seven-month low the previous month, according to Associated Builders and Contractors.

Roughly one in three office buildings in the largest U.S. cities are well suited to be converted to multifamily residential properties, according to a study by global real estate firm Avison Young. Some 6,206 buildings across 10 U.S. cities present viable opportunities for conversion to residential use.

Lee Frederiksen, Managing Partner, Hinge, reveals key takeaways from the firm's recent High Growth study.