After several years of significant price fluctuations for nearly every type of construction material, Gordian’s Q3 Construction Cost Insights Report delivers a cautiously optimistic outlook for Q4 and beyond. Influenced by a host of factors — including labor shortages and changes in tariffs — the market has been nothing shy of volatile. Now, looking ahead to the end of 2023 and beginning of 2024, industry experts anticipate an overall price stabilization.
Despite this optimism, however, uncertainty remains how ongoing labor shortages, a bustling market and infrastructure/large-scale project demands will ultimately impact construction material pricing.
Here is a high-level summary of Gordian’s Q3 Construction Cost Insights report to help you understand what to expect in the coming months.
Price Fluctuations in Construction Material Costs Projected to Stabilize
Since 2020, the cost of construction materials has been likened to a rollercoaster, due to its unrelenting ups and downs. From lumber to aluminum, virtually no material has been spared from frequent and significant price increases and decreases. In a year-over-year summary from 2022 through 2023 (cited in the report), Gordian determined that 82% of all construction materials experienced a sizable increase, climbing 19% on average.
As life across the globe slowly gets back to pre-pandemic norms, construction material pricing is anticipated to follow suit. Costs will not only start to level off and decline but the large jumps — both up and down — are set to calm. More specifically, the report predicts that most materials will now see a yearly price change of less than 5%. Thanks to stabilizing inflation, steady price decreases are expected in early 2024.
Going even deeper into the numbers, Sam Giffin, Director of Data Operations at Gordian, has stated that concrete prices are projected to decrease 1% to 2% annually until 2025. Materials such as plastics, wood, plaster, composites and others are expected to see average annual increases of up to 6.5% during the same period.
Packed with data, expert opinions are future predictions, review the comprehensive Gordian Q3 Construction Cost Insights Report now.
Despite Good News, Industry Experts Advise Cautious Optimism
Although this news paints an overall positive picture for the future of construction material pricing, experts from Gordian and leading firms advise cautious optimism. While the effects from the pandemic are starting to subside, the market is far from static. Global events, solar products legislation and continued labor shortages are just a few factors shaping the price and demand of various materials.
Jay Pendergrass, Vice President of Supply Chain Management & Equipment for Gilbane, was quoted in the report as saying, “Demand for workers exceeds labor supply currently, although conditions appear to be improving. Production wages are increasing costs for finished products, increasing the cost of goods.”
This, as well as other examples from the report, serve as a reminder that both new and familiar challenges will always be on the horizon, even as pandemic-related fluctuations recede. These variables must be diligently tracked, as they can offset potential construction material savings.
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In Times of Uncertainty, Knowledge is Everything
There will always be uncertainty when it comes to construction material pricing. Despite the positive outlook of cost stabilization for Q4 2023 and early 2024, forthcoming challenges make it imperative to stay up to date with market trends and pricing changes to avoid cost overruns and unreliable bids.
In addition to staying ahead of pricing trends by reviewing Gordian’s quarterly Construction Cost Insights Reports, there are plenty of tools to keep your organization informed about the latest construction material pricing data. Browse RSMeans Data products from Gordian today, and be sure to check out a list of virtual RSMeans Data seminars.
