Materials Price Increases, Choked Supply Hampering Projects


The price of construction materials spiked nearly 20 percent in 2021 overall despite moderating in December, according to Associated General Contractors of America Chief Economist Ken Simonson.

“Costs may not rise as steeply in 2022 as they did last year but they’re likely to remain volatile, with unpredictable prices and delivery dates for key materials,” he said. “That volatility can be as hard to cope with as steadily rising prices and lead times.”

Large St. Louis-based contractors say that during the pandemic’s infancy in mid-2020 until early 2021, they were able to place bulk orders for materials to be used for several planned projects. But increasing supply chain hurdles and scarcity of materials – such as roof joists and truss plates due to limited steel supply, framing lumber and engineered wood – are causing prolonged delays and wreaking havoc with project delivery amidst a tighter-than-ever pool of available skilled labor.

“Product is not coming online as quickly as projects are,” said industry expert Chris Bailey.

Bailey added that owners who put their construction projects on hold for two years are now signaling a green light to commence, but they’re getting sticker shock at revised project costs.

And as developers try to resurrect stalled deals, many are meeting with hesitation and more stringent requirements from investors and lenders.

AGC officials agree that rising materials prices threaten to undermine what is otherwise a strong outlook for the construction industry in 2022. AGC CEO Stephen Sandherr said the organization is urging the Biden administration to reconsider its plans to double tariffs on Canadian lumber and leave other trade barriers in place that artificially inflate the costs of key construction materials.

“Making lumber and other materials more expensive will not tame inflation, boost supplies of affordable housing or help the economy grow,” he said. “Instead, the administration should be removing tariffs and beating inflation.”

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