Construction Material Prices Rose in 2021
TopMark Funding does not just specialize in financing for trucks and trailers, we also specialize in other forms of business equipment. As such, we will continue to provide you with the latest in the trucking industry, and the construction industry as well. For our first article, let us state the obvious: construction materials rose in 2021, as backed by construction consultancy firm Rider Levett Bucknall (RLB) and their final quarterly report for 2021.
The rising cost of construction materials parallels what we have been seeing in the trucking industry: global supply chain shortages from everyone’s favorite pandemic: COVID-19.
On average construction costs increased 7.4% in 2021. In contrast, annualized inflation for the past month, comparing December 2020 to December 2021, was “only” 7%.
“The average increase in construction costs from 2020 through 2021 was 7.42%. It can be argued that some of the increase in 2021 may simply be catching up on the low rate of increase in 2020, but it is more likely a reaction to the combination of the labor shortages and supply chain issues that the industry has encountered,” according to the president of Rider Levett Bucknall North America, Julian Anderson. “In my opinion, while 2022 should be less frenetic than 2020 and 2021, it is unlikely that we will see any relief from the current high rate of cost increases until some of the heat goes out of the economy.”
What is interesting to see is that the most populous cities in the United States both had the highest increase in construction costs and the lowest for the fourth quarter. The largest was Seattle at 5% (20% annualized), and the smallest was, surprisingly, Washington D.C. at 0.37% (1.48% annualized). Could this indicate a shift in housing demand from Washington D.C. to Seattle?
As much as we would like to take solace in Julian Anderson’s prediction regarding 2022 being less hectic than the two years prior, we have been predicting the pandemic would be over “soon” since three months into the pandemic. We will have to wait and see when market forces resolve labor and supply shortages, and prices stabilize. We will report the numbers as they come!
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