The Rise of Building Material Costs and How it’s Affecting the Construction Industry
The global pandemic has proved to be very disruptive, causing chaos across many sectors and industries; the construction industry is no exception. Brought on by material shortages, the rising cost of building material is one of many challenges that have plagued the construction industry and added significantly to mounting pandemic-related challenges. So, why are construction materials so expensive?
A large percentage of contractors are saying less availability of building products and materials has driven the price up; a severe consequence of the pandemic.
Numerous contractors say they are facing at least one material shortage. The most-reported material shortage is associated with lumber, which has undergone an increased demand from a surge in housing construction during the pandemic.
Despite growing concern over materials shortages, all three of the Index’s leading indicators climbed:
- Confidence in new business opportunities throughout 2021,
- Revenue expectations increased, and
- Backlog edged up slightly
It has been evident that the pandemic has intensified issues contractors were already facing in the accessibility and material cost battle from tariffs along with a shortage of skilled labor. And though there’s a reason for optimism from suppliers and contractors planning to hire more workers over the next six months, there is a lot of uncertainty around what will happen in the months ahead. For the most part, contractors see adequate new business opportunities throughout 2021. Its likely confidence won’t come back until companies and workers have the assurance that they can get back to work safely.
Even though ongoing uncertainty around the future of commercial construction can be troublesome, it is important to remain cautiously optimistic about their medium to long-term prospects. Many leaders in the construction industry report a moderate level of confidence in the building supplies market to provide enough new business into the following year. We expect to see revenue remain about the same over the next year, some expect a decrease. Many contractors hope to see profit margins increase over the next year.
How the economy is doing during the pandemic
Material costs concerns remain high amongst many contractors, which has led to increased spending on tools and equipment; the increased costs will likely continue throughout 2021. Fluctuations in the price of building supplies remain very high as the market changes and budgeting uncertainty looms. Many suppliers indicate cost fluctuations have a moderate to high impact on their business practices and budgeting strategy.
Suppliers concerned with the oscillations in costs and material availability are looking to find affordable options and alternatives.
Heavy equipment rentals are quickly becoming the preferred way to get the job done. Eqpme offers private contractors and companies looking for specific high-quality heavy equipment the opportunity to get the equipment they need when they need it. They also allow companies sitting on inventory to put that inventory to work and rent it out. The ability to repurpose equipment helps build your business and creates a new positive revenue stream leveraging equipment that is not being used.
We are here to help save your business money on rental machinery while supplies are becoming more expensive. Visit our website here and sign up.
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