Given all of the past impacts from the unprecedented events of COVID-19, the weather impacts on construction. The freezing weather in Texas and Louisiana in February caused a lot of damage to the chemical facilities. We are seeing challenging times for material costs, especially for those of us who are in the insulation space.
Contractors here have seen staggering material cost increases over the past year as surging supply and demand chain bottlenecks have pushed prices to record highs and many predict those issues won’t end this year. Lumber and plywood saw the second-largest year-over-year price increases, at 85.7%; steel mill products, 67%; copper and brass, 49%; aluminum, 20.5%; and plastic construction materials, 14.2%, according to AGC’s most recent analysis of government data. Supply shortages and increasing prices have yet to show a demonstrable effect on project demand, but likely will slow or outright halt projects if these trends continue.
With all of this, stay tuned for an interesting back half of 2021. Here are some of the things that we may see happening as we move forward:
- Economic boom coming driven by government spending and pent-up consumer demand.
- Supply shortages will continue to grow.
- Risk of higher long-term inflation growing.
- Mortgage rates will rise but will return to more “normal” levels.
- The Pandemic endgame is ahead of schedule in the U.S.
- Demand for housing will continue to be strong. House price increases will continue.
- Big job gains and credit availability will boost housing.
- The move from cities to suburbs will continue.
These are all just thoughts about what may be an equally interesting back half of 2021, driven by the many unprecedented challenges of the past 16 months. Hang on and be prepared to pivot again.