Primary Drivers in the Global Construction Materials Market
Construction industry forecasters have been predicting that the global construction materials market will exceed US $1 trillion by 2020 as far back as 2015. As we move into the next decade the market continues to be driven by an escalating and improved global economy combined with the demand for new urban infrastructure in developing countries as well as infrastructure renewal here in the US.
After nearly 8 years of continually increasing prices, it seems that materials for both the civil and residential construction sectors have finally peaked in the year-end of 2019.
According to an October 2019 report at NAHB, the National Association of Home Builders, year-to-date price growth for building materials is the slowest in years. Global Industry Analysts, Inc reports that the Asia Pacific region, led by China, the Middle East and Africa, and the US are the top 3 regions with the highest potential for growth in the construction materials sector driven by factors including:
- Increased demands for housing for an expanding middle class
- Increased focus on LEED (Leadership in Energy and Environmental Design) projects and sustainable green construction.
- Rising investments in infrastructure
- Increasing commercial real estate development
- Material technology advancements
The Slowing of Construction Materials Price Growth Could Be Good News
Housing affordability has been hampered by a variety of industry-wide burdens including the chronic construction labor shortage and tariffs on 10 billion US dollars worth of construction materials. Regulatory costs account for a whopping 25% of a single home price and 30% for multi-family developments. With the surge in material prices behind us, and hoped-for regulatory reform in Congress, home builders are anticipating that "homeownership is within reach of hard-working families."
Softwood lumber prices have fallen 8.7% over the past 12 months but remain 15% higher than they were after the price surge which began in 2016. In September the Prices Paid Index showed lumber increasing by 3.8%. Gypsum products are also showing modest rebounds with prices rising 0.3% in September after a similar 0.5% increase in August, halting the 3.9% decline in 2019 which was the largest plunge since the Bureau of Labor Statistics began posting seasonally adjusted prices in 2012. Prices for ready mix concrete followed suit with a .6% drop, the first price decrease in 8 months. Concrete projects in the Northeast region benefited from the largest regional decrease with concrete prices falling by 3.5%.
In 2018 building material prices were cited as the top problem for 87% of construction companies. In 2019 that number has dropped to 69% and availability of experienced labor took the top spot in 2019 with 82% of builders seeing the cost/availability of labor as the biggest challenge. In the civil construction and engineering sectors material price volatility, rapid technological advancements, and talent shortages are all obstacles yet to be overcome in 2020.
About Resource Erectors
As any seasoned construction professional knows, when construction material prices fall, construction starts will rise. Materials and labor costs are the 2 most critical components of any construction project whether your company is transforming the skyline with bridges and skyscrapers or raising new residential homes.
While construction material prices may be beyond your control, acquiring the most qualified professional engineering and construction talent to take your company to the top levels in today's demanding construction sector is the critical factor you can control.
At Resource Erectors we've made it our mission to match the top construction and engineering professionals with the industry-leading companies who need their talent. We have positions available in a wide range of construction materials sectors including aggregates, silica sand, concrete, mining, and minerals processing.
If you're an employer looking to build your professional dream team Resource Erectors maintains relationships with thousands of the most talented candidates for Senior Executive and Operations management, mechanical, civil, and mining engineers, sales and business development managers, and safety and environmental specialists just to name a few, so please don't hesitate to contact us today.