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Construction Materials, Overall Industry Continue Downward Slide

Linesight’s latest United States Country Insight and Commodity Report for Q1 2023 revealed that while there has been slight economic growth 1.6% in 2023, the construction sector declined 0.9%--a slide being attributed to a lagging residential sector, ongoing labor shortages, and elevated interest rates.

The report also noted that descriptions in the supply chain have eased, but many Long Lead Equipment (LLE) suppliers reported being at operational capacity, with order books full up to Q3 2024.

Across all sectors, labor continues to be a concern with the decreased skilled labor pool magnified by the increased number and size of certain projects.

“While we are seeing a continued contraction of the U.S. construction industry, it has reduced in scale to an anticipated 1% for 2023,” said Patrick Ryan, EVP of the Americas at Linesight. “The longer-range forecast is more optimistic with a projected growth rate of 4.5% CAGR from 2024 to 2027, due to increased investments in the energy, transportation, and housing sectors. As commodities continue to stabilize, we are more optimistic about the industry despite the short-term challenges being faced at the moment.”

Additional insights found lumber prices continue to fall, with the average quarterly price down by 14.5% in Q1 2023 when compared to Q4 2022.

Steel prices, though, saw a slight uptick in the first quarter of the year. However, the report states Improved supply and weakness in the residential sector will be offset by increased spending on infrastructure and industrial construction projects and it is anticipated that flat steel will remain elevated in Q2 2023.

In February, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index for January 2023 revealed that the price and availability of building materials topped the list of problems builders faced over the past 12 months, but interest rates, general inflation and negative media moved considerably up the list. According to responses on the January 2023 survey for the NAHB/Wells Fargo Housing Market Index (HMI), building material prices were the most significant issue for builders in 2022 (cited by 96% of builders), followed by availability and timing to obtain building materials (cited by 86% of builders). Both problems topped the list in 2021 as well.

According to Trading Economics, lumber is expected to trade at $362.46/1000-board feet by the end of Q1 2023.

The cost and availability of labor has also been a relatively widespread problem, reported as a significant issue by 82% of builders in 2021, and 85% in 2022.

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.

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