Every quarter, Gordian lends its expertise to the Construction Cost Insights Report. Produced in partnership with Building Design+Construction, the report features market observations and analysis from industry leaders, based on their experiences and Gordian’s RSMeans™ Data construction cost database. The industry standard for cost accuracy, RSMeans Data contains over 92,000 unit line items comprised of material, labor and equipment prices localized to 970+ locations. Available digitally and in print, this data is backed by more than 30,000 hours of research every year.
We recently published the latest Construction Cost Insights Report, covering Q4 of 2024. Here are some highlights from the most recent report, plus trends our experts are watching as we head into 2025.
Global Balance in the Materials Market
One of the big headlines coming out of the Q4 Construction Cost Insights report is that, overall, material costs have achieved equilibrium. The materials market is finally stable after being upended by the COVID-19 pandemic and costs are now responding to the predictable laws of supply and demand. Structural steel prices have dropped to manageable levels after a period of high demand and framing lumber costs remain well below their 2022 highs. Conversely, copper and conduit prices are rising to meet global demand.
This balance in the materials market is a breath of fresh air for project owners and contractors, who undoubtedly welcome the stability. But balance is an ephemeral phenomenon. Slight changes in the atmosphere can throw it off course.
Construction Costs Under Pressure
The fourth quarter of 2024 has been characterized by whiplashing change, both domestically and on the global stage.
In North America, Hurricanes Helene and Milton overwhelmed transportation routes and paralyzed manufacturing hubs, particularly in and around North Carolina. These disruptions affected the availability of materials like steel and drywall and created challenges in labor and equipment availability, contributing to regional cost fluctuations and project delays. A protracted construction labor shortage is pushing wages higher and extending project timelines. The U.S. held presidential elections after the production of the Q4 report, but we would be remiss if we did not mention the economic policy of the incoming administration as a potential influence on construction material costs.
Internationally, stimulus measures out of China have ramped up demand for copper and other construction materials, straining supply chains. The increase in demand, mingled with higher shipping and import costs, may send copper costs soaring, disturbing the precious stability of the construction materials market. This demand comes at a time when ongoing wars in the Middle East and Eastern Europe continue to threaten copper supply.
Building Resilient Supply Chains in 2025 and Beyond
Supply chain fragility has been a topic of conversation in the construction realm and beyond for the last four years. The Q4 Construction Cost Insights report includes expert recommendations for strengthening the supply chain for the immediate future and the long term.
Strategies include diversifying sourcing, particularly for essential materials like steel and copper, investing in prefabricated assemblies to mitigate labor constraints and maximize the project timeline, and turning to durable, eco-friendly materials like cross-laminated timber and hempcrete to enhance construction efficiency.
Looking Ahead
Gordian’s internal experts and other industry leaders are looking to the new year with cautious anticipation. Looming interest rate cuts are expected to increase demand by the middle of 2025, however, labor shortages and environmental risks at home along with ever-changing geopolitical dynamics have the potential to dampen positive outcomes. These conditions necessitate savvy cost management and agile sourcing strategies to remain competitive in the marketplace.
