Although material price fluctuations have wreaked havoc on construction, labor has become the dominant source in driving costs, experts say.
U.S. commercial and residential builders breathed a sigh of relief last month when softwood lumber prices dropped more than 30% after reaching an all-time high in May.
Although prices still remain elevated, they have come down to a more manageable level, experts told Construction Dive.
These fluctuations in the price of lumber are related to the supply chain, said Daniel Pomfrett, vice president at Cumming, a project and cost management firm. Now that lumber prices have started to decline, Pomfrett said contractors should not expect the upward spikes that characterized earlier pandemic stages.
“I think we’re now starting to see that demand rise above as some people held back their projects in that pandemic period,” said Pomfrett. “But the supply chains, in actually getting that raw material, that’s really where we’ve seen that sort of pressure that’s being built up and so, as that pressure is being released, what we’re seeing is that the prices are coming down.”
Lumber prices remain above pre-pandemic levels, despite dropping below the peak price observed in May 2021, according to Associated Builders and Contractors Chief Economist Anirban Basu. Though massive spikes are unlikely going forward, Basu said there continues to be “significant volatility.”
This is an excerpt from Construction Drive, authored by Sebastian Obando.