Construction Material Outlook – Q1 2022

Based on market research by MCP Group 12/21/2021

Please see our summary analysis at the end of this information for our recommendations on moving forward with your project successfully.

Construction Material Outlook – Q1 2022

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Per our last report in September, the lumber bubble had finally popped, driving prices from nearly $1,600/BF in May to a low of under $400/BF in early September. It took time, as predicted, for this to trickle down to the consumer level, but eventually relief was felt. Since September, lumber has again been on the rise and is currently trading at $1,100/BF. The cost at the consumer level remains relatively low, but is sure to creep up in Q1of 2022 as the rising market costs hit the consumer level.

So what caused this upward trend? When prices dropped significantly in Q3 and Q4 of 2021, wood frame projects put on hold were quickly turned loose, and “do-it-yourselfers” resumed weekend projects as well. Simultaneously, sawmills slowed production facing a bad wildfire season in the Pacific Northwest and British Columbia. To top it off the extreme flooding in British Columbia last month impacted crucial trucking and rail routes kicking rising lumber costs into high gear. The recent impact of the December tornadoes is yet to be determined, but
it’s safe to say it will not help the upward trend.

Looking into 2022, we expect lumber prices to slowly rise in Q1, but many experts expect a pullback in Q2 as more mills come on-line and overall economic activity returns to normal.

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As 2021 winds down, we are seeing HVAC equipment suppliers announce increases of 5% - 20% effective January 1, 2022. These increases are primarily due to supply chain challenges, raw material cost increases, increased labor rates, and elevated transportation costs. Lead times on HVAC Equipment are becoming an increasing issue across the board, sometimes running 6 – 8 months on certain equipment. Early bid packages and early ordering of equipment will be key to keeping project delays from occurring.

Plumbing materials are following the same trends for the same reasons. Plumbing material suppliers have announced 10% - 15% increases effective January 1, 2022 with at least two additional increases during 2022. Over the past year, copper pipe has increased 135%, water heaters are up 55%, and PVC piping is up a whopping 220%.

There is some hope that plumbing and HVAC materials will stabilize in mid-2022 as supply chain issues are resolved but there is no certainty at this point.

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Electrical conduit manufacturers announced cost increases again last month on Metal and PVC conduit due to raw material increases and rising transportation costs. Conduit demand is predicted to stay strong into 2022 and additional increases are expected. Copper and Aluminum wire have seen significant increases in 2021, and future increases in 2022 are to be expected. Lighting manufacturers are expected to announce another round of price increases in January, 2022, ranging from 8% - 30%, not to mention additional shipping and handling fees of another 5% - 7%.

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Structural/Miscellaneous Steel and Metal Studs: COSTS TRENDING

As previously reported, steel prices spiked sharply in 2021, up 220% from 2020. Relief was not originally expected until Q2 or Q3 of 2022, but it appears that relief may come sooner than expected. Severe production cuts caused the 2021 spike, but US capacity levels are pretty much back to normal. We have seen leveling of prices and the start of declines in Q4 of 2021. Steel prices are predicted to continue to decline heading into 2022, but it’s unclear if the bubble will pop as it did in the lumber market, or if the decline will be more gradual.

The infrastructure bill is not expected to affect the steel market until 2023 as most projects will be in the planning and design stages in 2022, with construction starts holding off until 2023.

Warehouse construction continues to push forward and bar joist lead times increase daily, with most manufacturers not guaranteeing deliveries for 9 – 11 months after ordering. We are seeing an increasing number of steel frame projects being designed with wide-flange beams in lieu of bar joists to meet construction schedules, with surprisingly low cost impacts due to this change. If this trend continues, the hope would be the bar joist manufacturers can catch up with the warehouse orders and lead times will decrease in mid-2022.

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The cost of asphalt is a direct reflection of crude oil costs. Rising production from OPEC countries and the US has led to increased inventories of crude oil in Q4 of 2021 and is expected to continue into 2022. The global demand for crude oil is expected to gradually slow in 2022 as well. Increased inventory and slowing of demand mean prices should continue to fall through Q1 and Q2 of 2022, with asphalt costs following this downward trend. Expect relief Q1 of 2022.

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The demand for roofing services and materials remains high going into 2022. Roofing contractors are reporting large backlogs of work and manufacturers are seeing the effects of these demands heading into 2022. Lead times on asphalt shingles, membrane roofing, and roof insulation have increased to 6 – 8 months in certain cases. This high demand has triggered price increases with very short or no advance notice to roofing contractors, making it very difficult to hold “bid day” prices. There is currently no relief in sight as it relates to price volatility and lead time issues. If relief were to come, it’s not expected until mid to late 2022. Expect relief in Q3 or Q4 of 2022.


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Appliance costs in 2022 are expected to continue rising due to semi-conductor and raw material shortages, combined with container freight shortage and transportation challenges. Demand for appliances is forecasted to stay very strong with production constraints not expected to be resolved anytime soon. The prediction for appliance production to catch up with demand is not expected until Q4 of 2022 at the earliest.

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Summary Analysis: Overall Cost Trends

Based on our research and communication with industry partners, costs are still rising, with the exception of steel and asphalt which appear to be headed downward. We are hopeful that costs across the board level out in mid-2022, and we should have a better sense of this by the start Q2. If it is your expectation to start a project in 2022, it is our recommendation to start your design and due diligence process now. This will give our team time to work through budgets and give you sound advice on material selections and potential early bid packages. We have been successful with this to date and fully expect that we can help you move forward.

Disclaimer: The information contained in this document is based on general market research and current and past experience in the construction industry and represents estimations and opinions only. Any reliance, action, or inaction based on any of this information is at your own risk and MCP has no responsibility, obligation, or any liability relating thereto.