Construction Price Trends – Q4 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 – Q4 2023

Gren Up and Down

After a welcome decrease in lumber prices the past year (around 20% from this time last year!), there’s been no real recent change in price in the past quarter. Recent drops caused by inflation and interest rates influencing demand, causing supply to catch up with demand, have cooled. Demand is weak as construction spending continues to drop, so experts expect these pre-pandemic prices to hold for a bit, perhaps through 2024.

Yellow Up

HVAC equipment pricing rose steadily in 2023 due to the new SEER-2 regulations mandated by the U.S. Department of Energy in January for energy efficiency purposes (the new minimum is a level of 14), and plumbing fixtures rose a bit too this year, by 1.8%. Though equipment pricing was essentially stable in Q3, the cost of plumbing and HVAC in relation to construction projects still increased. The labor market is mostly to blame; rising labor costs due to inflationary pressures have persisted, which gets passed on to the clients. The median hourly wage for the MEP trades (Mechanical, Electrical, and Plumbing) have each gone up nearly $1/year since 2018 and seems to show no indication of slowing, especially since a study by the Associated General Contractors of America (AGC) found 93% of construction firms have open positions they’re trying to fill. Unfortunately, there doesn’t seem to be any sign of relief in this category past Q4. 

Gren Up and Down


After enduring many quarters in a row of rising costs (and indeed, roofing costs are over 40% higher now than when the pandemic hit around February 2020!), some stability was found in Q3, with prices expected to hold steady this quarter as well. However, price increase notifications were sent to contractors by manufacturers in Q3 (stating a hike of 5-7% is coming), and energy costs are also spiking, so further increases are expected around Q1 or Q2 of 2024.  

Gren Up and Down


Gypsum products also are over 40% higher now than pre-pandemic times, but also have shown the same recent stability in cost as roofing. Supply is readily available, with no apparent danger of prices going up in the near future. There’s been a slowdown in demand, as well as a reduction in the price of raw materials. Expect relief to continue for an additional quarter or two, if not longer. 


Yellow Up

Cement and concrete products such as CMUs and ready-mix concrete, have seen around a 9-11% increase, respectively, in the past year. Demand has outpaced supply and driven prices up. A large U.S-owned limestone quarry in Mexico closed in mid-2022, a move by their government due to environmentalist pressures, exacerbating the problem. Though there’s been less than a 1% increase since last quarter in concrete products (with the exception of concrete pipe, which has jumped over 9% since last quarter), the cost is expected to rise due to factors such as continually rising transportation costs, dwindling supply, seasonal demands, ever-present rising labor costs, and manufacturing and equipment costs. 

Yellow Up

Though cost has gone up very slightly in this category during Q3, the greater concern over the past year has been extended lead times for items such as transformers, generators, and especially switchgear. These items still take as long as 40 weeks or more. Lead times are not expected to improve, and in fact may worsen, due to the combination of many multibillion-dollar government infrastructure projects stressing supply, and inflationary pressures. This imbalance between supply and demand is expected to drive up costs even further in 2024. MCP Group continues to take great care to get those aspects of projects discussed up-front, then to order these items at the necessary time in order to receive them at the right time for the construction schedule. Small increases are expected in the coming quarters of 2024. 


Green Down

All aspects of steel saw a small price decrease in Q3, following the trend for most quarters in 2023. Finally, after historic increases were seen in 2021, raw material cost percentages fell by double digits for many metals, though copper lately seems to still be on the rise. 

Unexpectedly, the United Auto Workers union strike could cause swings in the steel market. Since steel makes up more than half the content of an average vehicle, their demand has lessened (around 15% of domestic steel shipments in the U.S go to the automotive industry.) We will stay attentive to the effects of the strike, as well as other factors, in the coming months. For now it’s safe to say relief should last through Q4. 


Yellow Up
Summary Analysis: Overall Cost Trends

Construction spending grew in 2023, though the sheer number of projects has decreased.  The real estate market has had quite a large influence on the construction business; multi-family projects are increasing due to the lack of affordable housing that came about post-pandemic, and the need for office buildings has mostly gone to the wayside, as many companies continue to embrace the benefits of remote work. Other lucrative areas of the industry include hotels (with the return of leisure travel post-pandemic), education (as college and school districts catch up on projects post-pandemic), and healthcare (since the population of baby boomers is aging.) 

The price of construction equipment further climbed since last quarter’s report—nearly 2% per month since July, amounting to nearly 10% the past year. Diesel fuel also jumped at the end of the quarter; 34.6% in August, and over 77 cents a gallon in the past ten weeks. Unfortunately, these increases lead to a higher bottom line on construction projects. 

Relief has continued regarding supply chain issues, which have improved greatly in the past year and even more pronouncedly in the past quarter. Switchgear and some HVAC components remain on a long backlog, but everything else seems to have eased. 

Lastly and perhaps most interestingly, MCP Group found that brand loyalty often had to go to the wayside due to both cost and extended lead times, in the HVAC, Plumbing and Electrical worlds especially (though certainly all trades were affected.) In 2022, Principia conducted a survey of builders and installers, regarding whether most tended to stick with preferred brands post-pandemic. When the supply chain was disrupted and work still had to carry on, over 80% of those surveyed found themselves substituting brands at least sometimes due to long lead times. Also, 64% of builders surveyed, as well as 48% of installers, reported needing to switch brands “often or always.” Though not the fault of manufacturers due to what was going on in the world, brand loyalty could be weaker from here on out. The need to substitute could have woken customers up to comparable performance by other brands (sometimes at a lesser cost) and raised their comfort levels to alternative brands when lead times were/are long on their preferred brands. Time will tell if all or some purchasing could go to new suppliers in the future, and perhaps that fact could keep manufacturers a little more competitive with their pricing. 

Disclaimer: This document’s information is based on general market research and current and past construction industry experience 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.