Construction Price Trends – Q3 2023

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Based on market research by MCP Group 

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

Construction Material Outlook – Q3 2023

Green Down

As of May, prices have decreased. However, these costs are still significantly higher than three years ago. The downward trajectory of lumber pricing has played a significant role in the overall decline of some construction material prices. Several factors are putting pressure on lumber demand. Residential construction, a significant consumer of lumber, has been particularly hard-hit, as evidenced by the substantial decline in new home sales this year. This decline has been partially triggered by rising mortgage rates which have almost doubled since early 2022. Unless the dynamics of the housing market improve, it is likely that lumber prices will continue to remain depressed. Mill capacity has improved, hopefully lessening the supply issues in the coming quarters. Lumber prices will remain on a downward trend, but other many key construction materials continue to get more expensive. MCP will remain vigilant in the changing market.

Yellow Up

While we might see some relief from rising materials costs in other areas, we are still experiencing long lead times for some equipment, and price increases for plumbing & HVAC materials. We also anticipate an impact on construction costs due to some of the new energy codes being put in place. The volatility of copper prices and supply may persist due to the demand from China and government stimulus programs associated with the energy transition. Unfortunately, we do not anticipate a quick resolution to the demand challenges and higher prices, so we are closely monitoring these trends to ensure that proactive solutions are employed for the benefit of our clients.

Gren Up and Down


The cost of roofing has remained stable throughout Q2, though it is still up over 18% since this time last year. Besides inflation being an obvious cause, recent tropical storms and other weather events have led to this. However, roofing supply chains have recovered, so there’s been a stabilization of procuring some roofing system components that were previously problematic. This relief is expected to continue through Q3, though it could show a very minimal increase simply due to seasonal demand.

Yellow Up

Drywall and gypsum products have been increasing since the start of the pandemic, mostly due to the climbing production cost at the manufacturer level. The residential construction demand for these products has lessened, but the demand has remained the same in non-residential construction. Prices are not necessarily expected to go back down, but very large increases are not expected in the near future.

Yellow Up

Lead times and price have been fluctuating but are generally trending up. Electrical gear continues to be the longest lead-time material for most commercial construction projects. Depending on the manufacturer, complexity, and specifications, typical lead times for electrical gear have swelled to 50 weeks or more for electrical services, panels, transformers, breakers, disconnects, meters, and related accessories. This is why it is so important to get proactive and engaged early, to stay ahead of these potential challenges. MCP has made this a priority to get these long-lead time items ordered as quickly as possible to avoid unnecessary wait times which can affect project schedules.


Green Down

Following a run-up in price over the past few months, the price of steel has seen a decline as more supply enters the market. However, buyers remain focused on inventories and cost controls across all products as service center inventories have come down despite a steady supply of shipments.

Biggest Moves for Raw Materials and Steel Prices

  • Midwest HRC future prices fell 6.6% to $792 per short ton as of June 1.
  • U.S. shredded scrap prices saw a 6.79% decline to $467 per metric ton.
  • Chinese steel slab prices dropped by 7.77% to $601 per metric ton.
  • Chinese HRC prices fell 8.16% to $552 per short ton.
  • Finally, Chinese coking coal prices saw the largest month-over-month decline of the index for the second consecutive month, with a 15.7% drop to $267 per metric ton.


Gren Up and Down
Summary Analysis: Overall Cost Trends

New research by Oxford Economics suggests that construction materials prices have shifted permanently higher due to the shocks of the past couple of years. Developers and investors should anticipate costs to be at least 15-20% higher in 2024 and onwards than they were in 2021. It’s projected that even if the overall economy does experience a recession as expected, that many categories will still continue to show inflationary tendencies, due to so many multi-billion-dollar megaprojects which are under development in the U.S. It seems, though, there should be another quarter or two before this recession is projected to hit (if it ever does at all.) 

The largest issue for the industry, and indeed the broader economy, does continue to be inflation. Besides the material & equipment price fluctuation caused by that, the other major factors influencing current & upcoming projects continue to be having the right team in place, communication, weather, and the aging workforce causing labor shortages. (The Bureau of Labor Statistics estimates there are a half million job openings in the construction industry, a number likely to increase as 20% of current construction workers are over age 55 and set to retire soon.)

There’s good news to be had regarding shipping costs & timeframes, at least. Consumer behavior post-COVID is shifting away from purchasing goods, to spending on entertainment & travel; so shipping costs have normalized, and port congestion has eased. There are still long lead times for electrical equipment, as mentioned above; but generally, supply-chain issues are nowhere near as pervasive as they have been for well over two years.

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.