Construction Material Outlook Q4 2024

Construction Material Outlook – Q4 2024

Yellow Up Lumber: Trending Up 

There is obvious concern about the effect of the new 25% tariff on Canadian products that was nearly imposed by President Trump in early February. The new rate would be nearly 40%, as the current rate already sits at 14.5%. (At the time of this writing, the Canadian & Mexican tariffs are on pause; whether they come to fruition remains to be seen.) Since the U.S. currently gets about 30% of our softwood lumber supply from Canada, this increase would be significant. And last quarter, Western Forest Products in British Columbia lessened production by approximately 30 million board feet in anticipation of the increased tariff, though it was partly due to other market challenges as well. 

There are things the U.S. can, and likely will, do to help combat higher lumber prices due to Canadian tariffs. The U.S. does export lumber to China and other countries, so that could be reduced to keep supply here. Additionally, there are other countries besides Canada that export softwood lumber to the U.S. and diversifying the sourcing from those markets could potentially help with increased supply. New markets could be sought out as well. Lastly, domestic production could be increased from our own publicly owned or federal forest lands. 

It should be mentioned that the National Association of Home Builders (NAHB) are advocating that the president exempts building materials from the new tariffs because of their harmful effect on housing affordability, which was a mentioned goal of his presidency. Whether or not that request will be a success remains to be seen. 

The industry will likely turn to new sustainable building materials for timber replacement whenever possible as well. CLT (Cross-Laminated Timber) appears to be increasingly popular for framing, as it requires less energy to produce than concrete, and is just as strong, yet is five times lighter. It can be prefabricated faster than comparable materials, and resists fire better than traditional timber—a fact that should be considered when rebuilding after Los Angeles’ devastating wildfires. 

As we stand now, lumber prices are up 9.6% from a year ago (and 3.5% higher than a month ago.) With the impending Canadian tariff, curtailed sawmill production, and the rebuilding that will need to be done after the recent tragedies such as the wildfires in Los Angeles and Hurricanes Milton and Helene, lumber costs are projected to rise next quarter. 

Yellow Up Plumbing/Electrical/HVAC: Trending up  

MEP engineering is rapidly evolving to meet the demands of modern construction through innovation, energy efficiency, and sustainability. In 2025, a major focus is on low-carbon design, with MEP systems integrating energy-efficient HVAC, decentralized renewable energy, and embodied carbon reduction to achieve net-zero goals. Smart building technology and IoT are enhancing building operations with automated management systems, predictive maintenance, and occupant-centric design.

Indoor air quality (IAQ) remains a priority, with high-efficiency filtration, demand-controlled ventilation, and real-time monitoring improving indoor environments. Meanwhile, decarbonization is driving a shift toward fully electric MEP systems, replacing gas-based solutions with electric boilers, heat pumps, and energy storage integration.

3D printing and prefabrication are streamlining MEP component production, enabling rapid prototyping, on-demand parts, and modular solutions. Climate resilience is also crucial, with flood-resistant systems, temperature-resistant materials, and renewable energy backups ensuring buildings withstand environmental challenges.

Building Information Modeling (BIM) and digital twin technology are enhancing project coordination, accuracy, and lifecycle management. Water conservation efforts are advancing, with greywater recycling, smart leak detection, and low-flow fixtures becoming standard in sustainable buildings.

At the same time, material pricing remains volatile across mechanical, electrical, and plumbing sectors. Rising costs of metals like copper and aluminum, along with supply chain constraints, continue to impact budgets and project timelines. The industry is adapting through material-efficient designs, prefabrication, and alternative sourcing strategies.

Labor shortages in MEP trades are a continually growing challenge. Skilled workers, particularly electricians, HVAC technicians, and plumbers, remain in high demand as construction activity increases. Workforce development initiatives, apprenticeships, and automation are helping bridge the gap, but labor constraints continue to affect project costs and scheduling.

Finally, strong demand from data centers and EV infrastructure continues to impact manufacturer lead times. As the industry moves forward, these trends will shape the future of MEP engineering, ensuring more efficient, resilient, and sustainable built environments.

Yellow Up Copper: Trending up  

Copper cost hit its peak in May of 2024 (with the highest prices seen in 20 years), then dropped in Q3, with experts divided on whether prices would go up or down. They did rise in Q4, but historically the last quarter of the year is the strongest period for copper, so that wasn’t a surprise. Looking into the rest of 2025, the U. S demand for copper will remain high, with hopes supply will recover after having recently suffered; the additional 10% tariff just imposed on goods from China, our main provider of copper, will likely not help prices in months to come. There is continued hope for advancements in recycling, as well as alternative conductive materials in the new year. Look for copper pricing to remain high in months to come. 

Yellow Up Steel:Trending Up

In Q4 2024, steel prices dropped 2.85%, but uncertainty looms. With the future of U.S. Steel Corporation in question and the return of Trump-era Section 232 tariffs—imposing a 25% duty on most steel imports—the industry faces lasting ripple effects. While Canada and Mexico remain exempt for the moment, Chinese imports still face a 10% tariff.

Despite advances in recycling and increased use of scrap steel, these tariffs are expected to shake up the U.S. steel market in several ways:

  1. Supply Chain Disruptions
  • Higher costs for U.S. manufacturers relying on imported raw materials, including steel. For example, Midwest refineries using Canadian crude may see rising operational expenses, indirectly affecting steel production.
  • Auto supply chains, where parts cross borders multiple times, could face inefficiencies, reducing demand for U.S.-made steel.
  1. Retaliatory Risks
  • Canada and Mexico may impose counter-tariffs, threatening the $4.1 billion U.S. trade surplus with Mexico and Canada’s status as a top export market.
  • Mexico’s steel exports to the U.S. have already fallen 14% year-over-year, signaling potential vulnerability to further trade restrictions.
  1. Sector-Specific Challenges
  • Automotive: A 25% tariff could add $3,000 to car prices, weakening demand for vehicles—and steel—across North America.
  • Energy & Manufacturing: Canadian steel and aluminum, critical for U.S. infrastructure projects, may become too costly, forcing industries to seek more expensive alternatives.

As the landscape shifts, staying ahead of these changes will be crucial for businesses across the supply chain.

Yellow Up Building Insulation Materials: Trending up 

The building insulation materials market is on a steady growth trajectory for 2025. Insulations, particularly fiberglass, are projected to grow at a compounded annual growth rate of 6.4%, driven by increasing demand for energy efficiency and sustainable construction.

Key Growth Drivers:

    • Expanding Construction & Urbanization – Rising global construction activity fuels demand for effective thermal and electrical insulation materials.
    • Energy Efficiency & Cost Savings – Fiberglass insulation helps regulate indoor temperatures, lowering energy costs and improving building performance.
    • Sustainability & Eco-Friendly Practices – Recyclable fiberglass insulation is gaining traction as the industry shifts toward greener construction solutions.
    • Renovations & Remodeling – Upgrades and retrofits are replacing traditional materials with fiberglass, enhancing insulation performance and structural stability.
  • Innovation & Expansion – The industry is focused on product innovation, advanced manufacturing processes, strategic collaborations, and plant expansions to meet growing demand.

Regional Spotlight: North America

The North American fiberglass market held a 20.6% revenue share in 2024, driven by infrastructure development and rising automotive sales. The region’s push for energy-efficient buildings has increased demand for fiberglass insulation, while advancements in manufacturing are improving product quality and expanding its applications. Additionally, the adoption of lightweight fiberglass materials in automotive components is further fueling market growth.

With sustainability, efficiency, and innovation leading the way, the insulation market is poised for strong expansion in the coming years.

Yellow Up Overall Summary: Trending up 

Construction materials prices have held steady over the past two years, barring variability across certain categories. For example, copper saw a sharp escalation last year, while diesel prices went down significantly in 2024 and eased cost in other materials.  

With necessity being the mother of invention, better ways are constantly being sought to make construction stronger, faster, and less expensive, using sustainable materials wherever possible. In recent times, this was a large focus in the energy sector, and now the use of 3D printing is growing in popularity. This method of building has come to attention after its gain in popularity in Europe. In fact, 3D printing has already entered the Texas area in a significant way in Austin’s Wolf Ranch development, which features a hundred 3D printed homes. 3D printers have the added bonus of being able to print directly into construction on a job site, an advantage over the similar consumer-grade counterparts. This saves time, labor costs, and material costs, as well as reduces material waste and introduces easy new design opportunities such as curves. If 3D printing in construction does gain traction, it may take some time, as it’s a new technology few builders are currently qualified to do, there’s still a small range of building materials, and there’s a lack of relevant building codes.

Despite interest rate cuts late in the year, nonresidential construction spending momentum slowed. More cuts are expected throughout 2025, though. Project financing costs are still elevated and are not expected to drop soon; the recent new tariffs on goods from China, and the looming tariffs on products from Mexico and Canada, are an overall danger to many construction material prices, and changing immigration policies could cause future worker shortages. Freight costs are rising due to oil and labor cost increases; container prices rose 20% in 2024. MCP Group will continue to strive to stay informed of any and all issues that affect the timing and costs of construction for our clients.

 

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.