Commercial Construction Index Report Shows Contractor Optimism Growing Well into 2021

Covid-19 has created a pricing and inventory frenzy across the USA on building materials. Prices of building materials continue to rise as housing demand increases during the winter months and into 2021.

Home Depot Inc. and Lowe’s Cos., reported sales were up 24% and 30% for the recently ended quarter, as global inventory shortages make it harder for local building companies to compete with big brand home improvement stores.

Contractors are having trouble sourcing building materials locally with some driving over 600 miles across state lines to purchase supplies. With more people working from home (WFH), the housing market booming, and more DIY’ers looking to improve their properties; the demand for home improvement projects continues to put a strain on the overall supply of building materials nationwide as reported by the U.S. Chamber of Commerce Q4 2020 report.

Building Materials Price Increase

With supply chains disrupted from China across the globe, these shortages are increasing the building materials costs which are being passed down to the consumer.

An eight-foot piece of two-by-fours cost $3.07 in January but today they cost $7 dollars according to Billy Deorazio, sales manager at Bellevue Builders Supply.

Housing Boom

The National Association of Home Builders said that builder confidence hit its highest level since its monthly surveys began in 1985 with an index score of 90. A year ago it was 72, pre-pandemic. With low finance rates, record-breaking home purchases, and the overall migration shift from dense, urban areas to locations that fit homeowners’ lifestyles; 2021 is set to be another record year where people invest in their homes.

The new norm has forced employers to understand the shift from office work environments to the WFM mentality. Moving forward, employees now have the power to choose where they work, live, and play.

High-tax cities like San Francisco and New York City, are starting to see a massive outflow of “talent drain” to second and third-tier cities like Austin, downtown West Palm Beach, Sarasota, and Charlotte to name a few. These same cities and surrounding areas will also experience a residential building boom as well.

Total U.S. construction starts will increase by 4% in 2021 to $771 billion after declining an estimated 14% in 2020 to $738 billion, according to Dodge Data & Analytics’ 2021 Dodge Construction Outlook.

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