Learn More
Learn more
Construction escalation forecast report and analysis for key U.S. locations and materials developed by Skanska USA Building's Project Planning Group.
Construction Market Trends
Spring 2022
01. Introduction
02. Pricing
03. Forecast map
04. Supply chain
05. Construction/Labor
06. Materials
07. Contact us
Download Report
08. Webinar Series
Webinar Series
The Portland International Airport (PDX) Terminal Core Mass Timber Roof Structure
The cost escalation and supply chain effects of the waning pandemic have been replaced by the tragic and developing war in Ukraine. Historically, a two-year period in the construction industry would yield inflation of about 7 percent. The ENR Building Cost Index (BCI) is already up more than 5 percent through April and is on pace for a 15 percent increase in 2022, exceeding the 12.5 percent increase in 2021.
Mitigating Risks
Sharp, Climbing Cost Escalation Continues
Investigate the product requirements of your projects early in design and consider accelerated purchasing strategies for materials experiencing shortages, such as: electrical equipment, roofing material, generators, below-grade pipe materials and high purity process PVF
Continue to forecast above normal escalation in project proformas and monitor sanctions against Russian exporters/entities that supply metal products like copper, aluminum, nickel, iron and steel
Deep dive with your subcontractors on their labor force projections and capacity prior to awards
Manufacturers will note that climbing prices and long lead times also stem from the explosive demand in many sectors including data centers, automotive (EV), life sciences, distribution, semiconductor and infrastructure. High demand is driving up lead times significantly for electrical equipment due to large entities buying up capacity into 2025. Manufacturers are adding capacity and expanding their sourcing to alternative suppliers, but they simply can’t keep pace to meet demand.
To read the detailed remarks about supply chain challenges, download the full report.
Click Here
Additionally, labor has become an increasing concern. Unemployment is at a near 50-year low, but the construction industry is short over 650,000 workers. Non-union markets are experiencing wage competition between projects and in unionized markets, we expect labor contract renewals will require larger rate increases due to the increased cost of living.
Spring 2022 Construction Pricing Snapshot
12,791
Current Construction Industries Index
+2.5%
Change from previous quarter
Past one-year trend
Construction Index
$4.22
Current fuel price ($/gallon)
+19.9%
Fuel
$100.28
Current oil price ($/barrel)
+30.3%
Oil
$159
Current cement price ($ per CY)
+2.3%
Portland Cement
$1,962
Current standard plate price ($ per net ton)
+6.8%
Steel - Standard Plate
$1,310
Current plywood price ($ per MSF)
+4.2%
Plywood
$484
Current asphalt PG 58 ($ per ton)
+1.8%
Asphalt PG 58
Asphalt
Steel
Cement
Materials Index
Click an index or material to view details
+8.9%
12-month change
+18.5%
+40.7%
+73.3%
+5.2%
+69.5%
+50.2%
5,357
Current material price index
+7.9%
+36.8%
7,565
Building Cost Index
+3.8%
+15.6%
Source: Engineering News-Record
Source: U.S. Energy Information and Administration
Source: Bloomberg
Source: SteelBenchmarker
4,933
+11.2%
+37.6%
Change from previous year
12,465
7,214
+2.9%
+4.9%
+8.4%
+14.5%
$3.18
Current Fuel price ($/gallon)
+0.5%
+45.4%
$75.03
+2.1%
+86.5%
$150.10
-0.3%
+1.5%
$1,707
+15.3%
+178.9%
$1,253.95
-5.1%
+64.5%
$453.61
+2.0%
+15.8%
More Material Insights
Forecasting Local 2022 Construction Costs Across the U.S.
Miami/Ft. Lauderdale
Seattle
Portland
Orlando
Tampa
New Jersey
New York
Boston
Phoenix
Philadelphia
Washington D.C.
North Carolina/ Virginia
Cincinnati
Atlanta
Nashville
Houston
Dallas
San Antonio
Los Angeles
San Francisco
Click on the map locations to see construction forecast details for a specific city or region.
Phoenix, AZ
The largest construction projects in the Phoenix area are paying labor premiums to maintain workforces and avoid losing craft workers to other sites. A significant number of semiconductor and semiconductor support projects are underway and will remain ongoing for the next two years. Material and craft labor challenges are impacting pricing and availability of workers.
Want to discuss the local market position and forecast? Connect with Tom Feeney, Vice President of Preconstruction.
More Work and Opportunites Than the Labor Market Can Support
Cincinnati, OH
Despite inflationary pressure and supply chain uncertainty, there are currently no indicators that demand will slow in the short term. The strongest market sectors continue to be education, healthcare and multifamily residential. Life sciences and technology are also showing signs of growth in our region. This demand continues to put pressure on an already tight labor market. We are starting to see significant wage inflation which will continue the upward trend for overall construction pricing. Trade contractors are also being much more selective about the work that they pursue.
Want to discuss the local market position and forecast? Connect with Jeff Smoker, Vice President of Preconstruction in Ohio.
Significant Inflationary Pressure has not Slowed Demand for Construction
Want to discuss the local market position and forecast? Connect with Chris Hillyer, Senior Vice President of Preconstruction in Texas.
San Antonio, TX
No End in Sight - Increased Costs and Labor Shortages Aren't Slowing Down the Construction Market
The San Antonio market has a strong pipeline of projects in various market sectors and shows no signs of slowing down despite the incredible amount of continued cost inflation. Texas continues to see a significant population surge, and new residential starts in San Antonio are expected to hit record highs. Manufacturing is a significant growth area. Several new high rise apartment buildings are planned or underway in the downtown area. Large investments are also underway in the healthcare sector, with significant projects under construction for UT Health, UHS, a new State Hospital and many other healthcare providers. Labor is at a premium, and trade partners are limited in their ability and desire to budget work; instead, they are being very selective about what they are submitting pricing on, which may result in coverage issues on some trades. There is some speculation about how long this pace can continue.
Dallas, TX
Want to discuss the local market position and forecast? Connect with Linh Le, Vice President of Preconstruction in Texas.
North Texas Market is Robust as Ever
Local Construction Cost Forecast
With the DFW metroplex adding thousands of new jobs to the region, developers have millions of square feet either under construction or in the planning stages to house the growth. From e-commerce hubs and office towers to data center facilities and apartment buildings, construction is not slowing down anytime soon. Even with the supply chain issues and labor shortage, this is driving up the cost and availability of qualified labor in the market.
Atlanta, GA
Material prices and lead times continue to increase monthly in Georgia. The latest challenges in the market have been roofing materials and polyiso insulation material shortages. One possible solution is to make alternative material selections to meet project schedules while maintaining the designed R value for the roof system. Steel prices are starting to increase due to global events and are also an area of concern. Additionally, the residential market is still going strong in Atlanta with no slowdown on the horizon.
Want to discuss the local market position and forecast? Connect with Dane Wooley, Preconstruction Director in Atlanta.
Material Prices Increase Monthly and Lead Times Extend
Houston, TX
Strong Activity in Multiple Sectors
Crude oil prices higher than $100 per barrel and projected to continue increasing, these increases are driving the Houston oil and gas market as companies ramp up to meet demand. Along with oil and gas, the residential and commercial office sectors continue to enjoy a resurgence, as the Houston region is estimated to create over 75,000 new jobs in 2022 alone. Healthcare still remains strong with more than $2 billion worth of projects under construction or expected in 2022.
Nashville, TN
Want to discuss the local market position and forecast? Connect with Adam Hicks, Vice President of Preconstruction in Nashville.
Nashville Sees Continued Growth with Short Supply
Los Angeles, CA
Volatility in the subcontractor market is affecting the bids we are receiving. Many subcontractors are reluctant to hold bids on lump-sum hard bid projects, and some are holding their pricing for one week past the bid date, pushing the risk to the GC. Lump-sum design-build opportunities are still prevalent, but the risk of escalation is transferred to the GC; with a construction start of two plus years after going through DSA review, those opportunities are not worth the risk. It will be interesting to see how the GC market adjusts to this additional risk and if owners will change the contracting method or contract language to include escalation. Like most of the country, subcontractor pricing and lead times are up substantially and unlikely to subside soon.
Want to discuss the local market position and forecast? Connect with Paul Hackett, Preconstruction Director in Los Angeles.
Opportunities for Growth with Greater Risk
San Francisco, CA
Construction escalation continues at an unusually high rate for many materials. Lead times for electrical and mechanical equipment can challenge project schedules. Early procurement strategies are critical to nearly all projects. Construction labor rates are not increasing at the rates of some materials, but the market is experiencing a recruiting challenge to cover all the construction opportunities available. The State of California Department of General Services (DGS) Construction Cost Index (CCI) has increased by a shocking 9.2 percent from January 2022 to April 2022. This is following an escalation rate of 13.4 percent in 2021 according to the same cost index. This unusual escalation cycle increases the importance of early involvement by construction cost professionals who are following these developments closely.
Want to discuss the local market position and forecast? Connect with Mike Nelson, Preconstruction Director in San Francisco.
Abnormal Material Escalation Rates Continue and Demand for Construction Services is High
Portland, OR
Recent bids reflect a market that is still very volatile, with packages up anywhere from 19 percent to 75 percent over estimates from Q4 2021. National action on interest rates may help cool the market, but those effects may not be seen locally this calendar year. One major customer is offering $5/hr premiums for select craft to work on their campus, which will send ripples through the region.
Want to discuss the local market position and forecast? Connect with Steve Clem, Regional Senior Vice President of Preconstruction in Portland.
Spring Hasn't Thawed High Demand or Elevated Prices
Seattle, WA
Concrete is starting to be delivered again to job sites in King County and many projects are scrambling to get their share. (Note that no new labor agreements have been agreed at this time and future stoppages could occur.) It is likely that projects will not be able to recover the time lost due to the length of the stoppage and the pent-up demand. These delays will put further pressure on an already strained labor market and will exasperate budget pressures with the impact of the volatile material and commodity markets as the project completion dates slide. On a positive side, we are continuing to see owners in the tech, life sciences, healthcare and higher education market sectors procure GC services for large projects starting in late 2023 and into 2024. Our read on this is that employers are still seeing Seattle as a growth market—an attractive region with a strong workforce and lower cost of living when compared to the alternative California markets—and are continuing to invest significantly in the region.
Want to discuss the local market position and forecast? Connect with Alan Dunbar, Regional Senior Vice President of Preconstruction in Seattle.
Concrete Supply Strike Still Ongoing
Tampa, FL
The new housing market is one of the hottest in the country, with more demand for residential construction developments and the complementary service and distribution networks adding additional pressure to an already tight labor market. The Tampa metro-area is ranked high in housing growth with no end in the foreseeable future, and we anticipate increasing construction costs moving forward.
Want to discuss the local market position and forecast? Connect with Jeff Courtney, Preconstruction Manager in Tampa.
Residential Construction Not Slowing, Contributing to a Tight Labor Market
Unemployment rates for construction are continuing to stay low, while demand for new residential housing is high. The luxury market is especially hot in light of high demand from out-of-state buyers, and new commercial projects remain positive, adding pressure to a tight labor market. New infrastructure projects planned for release will add to labor shortages in 2022 and 2023. Higher education and healthcare institutions are releasing small/medium and, recently, large projects into the market for construction, and multiple, bigger projects are in the early stages of development. Miami Dade continues to be a destination for tech companies and will drive development in the commercial market, activating other industries around technology.
Want to discuss the local market position and forecast? Connect with Jeff Courtney, Preconstruction Manager in South Florida.
Residential Demand Continues to Expand
North Carolina/Virginia
The NC/VA market continues to see a strong pipeline of projects into 2022 and beyond, driven in part by major manufacturing facilities. While some projects are facing slight delays to overcome budget challenges, very few are being shelved entirely due to the unprecedented material cost inflation. As a result, the trade partner community has stayed optimistic about upcoming work and selective in their bidding, particularly for larger projects where they may be asked to take on the risk of future cost escalation. In the short term, material cost increases— particularly those associated with the war in the Ukraine—will continue to exert pressure on construction costs. What will be critical is whether this further price pressure, coupled with increasing interest rates in the coming weeks and months, will eventually result in the cancellation of more projects that are no longer economically viable. This will likely be necessary in order for the market to see any meaningful price relief at a macro level.
Want to discuss the local market position and forecast? Connect with Will Senner, Vice President of Preconstruction in North Carolina and Virginia.
Project Pipeline Remains Robust in Spite of Unrelenting Inflation
Washington, D.C.
The D.C. market is still rebounding from the pandemic and is now reacting to the effects of the war in Ukraine. Contruction continues to move forward in the residential, healthcare, distribution and education markets. Although escalation is still climbing, project teams are trying their best to either absorb some increases, identify viable alternative solutions or lock in pricing with early trade procurement strategies. After some stability, steel prices have started to rise again and projects that have not bought out steel and/or misc. metals are feeling the pressure. Currently, escalation is between 8–10 percent and looking like it will remain that way for the next six months to a year. Given current market conditions, the effects of the war, and the high demand for materials, we probably won't see a slowdown in escalation rates until late 2023 or early 2024.
Want to discuss the local market position and forecast? Connect with Apryl Webb, Vice President of Preconstruction, Washington, D.C.
Construction Continues to Remain Steady Amidst War Fallout
Philadelphia, PA
The Philadelphia market has been buzzing lately, with a large number of healthcare projects in the planning stages and the recent revival of life science projects in the region. Mid- and high-rise residential projects have continued their momentum from 2021, and higher education is definitely seeing a large amount of activity as we near the end of the pandemic.
Want to discuss the local market position and forecast? Connect with James Lane, Vice President of Preconstruction in Philadelphia.
Steady Growth Continues for the Region
New York, NY
Want to discuss the local market position and forecast? Connect with John Tamborino, Vice President of Preconstruction, Metro New York/New Jersey.
Life Sciences is the Biggest Player This Quarter
Supply chain issues and price escalation have continued to rise, challenging the industry to keep budgets and schedules in line for owners. Despite these challenges, over the next six months we expect major projects to come out in the transportation and infrastructure sectors. Healthcare will remain strong throughout the year and beyond, and life sciences continues to outpace the other sectors in new work for this quarter.
Want to discuss the local market position and forecast? Connect with Nick Culver, Vice President of Preconstruction, New Jersey.
New Construction Spending Continues to Increase Despite Record Pace Escalation
Next 6 months
6 months - 1 year
1 - 2 years
Metals and oil pricing are being impacted by the labor shortages and economic impacts resulting from the continued pandemic and the war in Ukraine; however, these challenges have failed to stifle the momentum of booming aviation, healthcare and higher education markets. Newark Airport Terminal A is slated to open its first gates in spring 2022, with the start of construction for the new $2.05 billion AirTrain project ready to commence in mid-2022. In New Brunswick, construction is underway for a new 12-story, 510,000-SF cancer facility that will be jointly operated by RWJBarnabas Health and the existing Rutgers Cancer Institute of New Jersey. Meanwhile, in Princeton, the Ivy League school continues its progress toward a goal of achieving net-zero carbon emissions in time for its 300th anniversary in 2046; they have eight new solar projects, geothermal infrastructure and other campus upgrades in full swing.
This map reflects local USA Building Project Planning Services team leaders’ opinions of market volume and capacity and is not based on published analytics or third-party forecasts.
Construction price inflation is/is expected to be above normal (3-5% per annum)
Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)
Connecticut
Want to discuss the local market position and forecast? Connect with Matt Impastato, Vice President of Preconstruction.
Construction Growth Continues
Market is experiencing significant/abnormal construction price inflation (+5% per annum)
Boston/New England
Market growth continues in the Boston region, driven by pent-up demand from early in the pandemic when the market was slow. Life sciences, higher education, corporate commercial, residential and government work are driving this growth, with significant expansion in the commercial lab and pharmaceutical sectors. Many subcontractors are at or near capacity with good backlogs for 2022 and some into 2023. Though material cost escalation slowed for the first three months of 2022, we have seen a return to above-average escalation, and availability remains a major issue. Delivery times for items that are traditionally long lead are still showing extended lead times, some by as much as 100 percent. Transportation, logistics and labor challenges are also disrupting the certainty of delivery. We anticipate this pressure will continue at least until late 2022. Collaborating with local subcontractors and our national Strategic Supply Chain team will help ensure materials remain available for our projects by seeking opportunities to alter materials used or issuing early design packages to get materials ordered earlier.
Want to discuss the local market position and forecast? Connect with Matt Impastato, Vice President of Preconstruction, Boston.
Construction Growth Continues Above Normal Trendlines
Click on the locations below to see construction forecast details for a specific city or region.
Miami/ Ft. Lauderdale
N. Carolina/ Virginia
Orlando, FL
Want to discuss the local market position and forecast? Connect with Brian Coakley, Director of Preconstruction in Orlando.
Diverse Market Types Keep the Pipeline for New Construction Thriving
Higher education and healthcare institutions are releasing small/medium projects into the market for construction, and multiple, bigger projects are in the early stages of development. Miami Dade continues to be a destination for tech companies, and will drive development in the commercial market, activating other industries around technology.
Illustrated by the rising number of building permits issued in the last year, Orlando’s Hospitality/Entertainment, Healthcare, and Residential Construction market sectors are keeping the pipeline of new construction thriving. A recent report by the University of Central Florida has predicted that the Orlando Metropolitan Area could expect to receive between 25,000 and 40,000 new single-family residences in 2022. With this steady economic and population growth, we will see a need for supporting facilities such as schools, retail options, healthcare, office space, cultural and recreational facilities. Additionally, numerous trade partners are reporting that with the completion and opening of the Ultimate I-4 Expressway, labor shortages throughout the region have lessened.
Want to discuss the local market position and forecast? Connect with Mark Lewis, Preconstruction Manager in Tampa.
Nashville continues to receive a steady flow of local, national and international investment fueling the construction industry. Q4 2021 reports from AvisonYoung, Cushman & Wakefield, Colliers and others consistently report increases in demand across various market sectors. The demand is best reflected in Davidson County, where Metro Nashville issued a record number of building permits in 2021. It's likely that many of the significant commercial projects being permitted are using a phased delivery approach, which may result in project procurements that extend into 2022. Phased delivery is not new, and it's being used more extensively to combat the market escalation and supply chain issues effecting every construction project. Q1 2022 building permit approvals are on pace to maintain near-record setting numbers from 2021. The tremendous amount of demand in the Nashville market has resulted in significant shortages in the available workforce, escalated labor premiums and local material shortages, forcing some suppliers to be on raw material allocations.
With backlog building up in early 2022, the increased competition for work we've seen over the past three months has leveled off, resulting in an increase in escalation. The market is now busy, and subcontractors have steady backlogs through the summer of 2022. Though material cost escalation slowed for the first three months of 2022, we have seen a return to above-average escalation. Delivery times for items that are traditionally long lead are still showing extended lead times, some by as much as 100 percent. Transportation, logistics and labor challenges are also disrupting the certainty of delivery. We anticipate this pressure will continue at least until late 2022. Collaborating with local subcontractors and our national Strategic Supply Chain team will help ensure materials remain available for our projects by seeking opportunities to alter materials used or issuing early design packages to get materials ordered earlier.
Supply Chain Trends and Insights
Skanska has been monitoring the impacts of the war in Ukraine on the global supply chain. In the U.S., the war has led to escalating prices for commodities, particularly oil. Before enacting sanctions, the U.S. imported less than 7 percent of our oil from Russia. However, the price of oil is determined by global supply and demand, and as a result, our small dependence on Russian oil has not protected us from escalating prices.
Status Key
Stable/Consistent
Trending Down
Fluctuating
Trending Up
Roofing supply chains remain constrained as record demand continues. Polyiso insulation is the most challenging material to secure with lead times at 52 weeks. Many projects are substituting EPS and XPS (alternate types of insulation) in place of polyiso, so lead times for these forms of polystyrene are extending as well. In addition, glass mat coverboard supply chains are being stretched thin. Expect lead times of 5 to 6 months in certain markets. Prices continue to escalate. A 5 to 10 percent increase in roofing materials is expected this year.
Lead Time
Price
Roofing Products
Steel pricing appeared to plateau at the end of 2021 and in the early part of this year, but many analysts were looking for pricing to fall in 2022. However, steel pricing is again on the rise due in part to disruptions in raw materials originating from the Russia/Ukraine region. Lead times are steady but may start to increase if raw material constraints worsen.
Structural Steel
Click for further analysis
Interior materials continue to escalate. Armstrong announced a 10 percent increase on ceiling suspension systems effective January 31 and a 12 percent increase on suspended ceiling panels effective January 3. USG announced a 30 percent increase on drywall effective January 3. Metal studs have been quiet, but with steel on the rise again, there is some risk going forward.
Architectural Interiors
Read More
Both dimensional lumber and panels are declining quickly. Dimensional lumber is down 25 percent since it peaked in early March 2022. Panels are down 21 percent since the March peak. Some analysts are predicting this will be short-lived, however, as housing starts continue at the blistering pace of 1.793 million (annualized) according to NAHB’s March report.
Wood-based Building Materials
Material inputs to lab casework (steel and resins) have stabilized from an availability point of view. Lead times have receded from 26 weeks to 18 weeks. Compared to last fall, pricing is up in the 25–35 percent range, mostly driven by escalating steel and resins. Now that steel is escalating once again, there is risk of further price escalation going forward.
Lab Casework and Fume Hoods
Demand for appliances remains high, and lead times are extended. In addition to semiconductor shortages, the appliance industry is challenged by port issues and distribution (trucking) bottlenecks. Some stabilization is expected in the short term, but significant relief is not expected until the latter half of 2022.
Appliances
Most of the major elevator manufacturers are communicating annual material cost increases in the range of 7–10 percent, which will translate to 3–5 percent price increases on the total scope for the full year. Standard lead times have increased two to four weeks on average because of material and component supply chain challenges ranging from metals to electrical components and semiconductors. At least one major manufacturer is forecasting lead time and price increases above these ranges.
Elevators, Escalators, Moving Walks
This quarter we added below-grade drainage pipe and materials—including PVC, ductile iron pipe (DIP), reinforced concrete pipe (RCP) and precast concrete drainage structures—to this category. Due to reduced manufacturing capacity, there is a national shortage of these materials. PVC and DIP lead times have increased significantly and are currently in the range of eight to 12 months. RCP lead times are a minimum of three months, and specialty items like fire hydrants are running six to 12 months.
Plumbing and Drainage
Lead times for HVAC equipment are highly dependent on which type of equipment is procured, as well as unique specifications and manufacturers. In general, air-cooled chillers, which are in high demand to support new data centers, certain RTUs and full custom air handlers are all running 30–45 weeks. If ECMs are required, lead times are pushing 70+ weeks. Lennox has announced to all its distributors that they are no longer taking orders for delivery in 2022. In other categories, lead times have stabilized or are coming down. Pricing, on the other hand, is very consistent and is expected to increase across all product lines and manufacturers in the range of 15–20 percent for the full year.
HVAC Equipment
While a global shortage of semiconductors is affecting several industries, the impact on building controls has been minimal due to mitigation efforts by controller manufacturers. Prices and lead time for materials are expected to increase moderately, however installation labor will continue to dominate price and lead time in this category.
Building Control Systems
Lead times for switchgear, switchboards, panelboards and transformers continue to rise as demand hits historic levels. At least one manufacturer delayed shipments by five to six months due to material and component shortages. Markets driving demand are data centers, automotive, warehousing and crypto currency mining. Gear supply chains are being constrained by PVC resin, semiconductors, panel lugs, metal, copper and other items. Lead times for the longest lead items may increase beyond the current 60–70 weeks. Panel boards, which are typically four- to six-week items, are now running up to 24+ weeks. Barring any new crisis, manufacturers are not expecting lead times for electrical gears to get back to normal until late Q3 2023 at the earliest.
Electrical Gear
Lead times for highly specific items, such as 5kV medium voltage cable in volume, are running 20–28 weeks; however, distributors of more standard materials continue to look for opportunities to build inventory levels in their distribution centers to protect from surging demand. While there have been no direct impacts to supply from the war in Ukraine, there do appear to be more end-user clients interested in securing materials much earlier than in the past. Some end clients are directly releasing orders up to 10 months early just to lock in pricing and availability. Over the long term, six to 12 months, there is reasonable probability we will see lead times and prices start to come down to reduce inventory levels in line with reduced future demand. Prices for this broad category are expected to increase 10–12 percent on average for the year.
Electrical Commodity Materials
Generator lead times stabilized between 45 and 52 weeks in the first quarter of 2022. At least two major manufacturers are reporting major supply chain constraints, which have caused late deliveries to commitments. Prices are expected to rise 5–10 percent over the next 12 months.
Generators
Domestic transportation costs will continue to rise in the short term driven by high fuel costs and increased drivers’ wages. However, spot pricing is trending downward, which is an indication of declining demand for trucking. This may indicate a downward trend of pricing in the longer term.
Transportation
Wood Products
Lumber pricing presented in the Supply Chain section of this report, reflects current pricing as it exits lumber mills in North America. This pricing has fallen dramatically. However, there is still higher priced inventory in the supply chain all the way through to wholesale and retail outlets. Plywood and lumber price declines at points of sale will continue to fall as inventory levels are burned off. Earlier in this report, we presented plywood price data that had not fallen off as dramatically, because it is measured at points of sale.
Steel pricing appears to be leveling off. In addition, there are some discussions starting around eliminating the Section 232 tariffs on imported steel. The Coalition of American Metal Manufacturers and Users (CAMMU) is urging the Biden Administration to eliminate the tariffs, stating that the U.S. has become an island of high-cost steel.
Drywall
Drywall pricing has escalated steeply over the last 9 months. However, the frequency of announced price increases from manufacturers has slowed in recent months. Residential building activity has slowed a bit since peaking in March but remains at a very high pace, keeping the pressure on manufacturers. Manufacturers continue to supply the market on “Allocation” or Controlled Distribution, which is stretching out lead times. Although pricing remains high, there is some evidence of stabilization but going forward will depend on housing activity. Additionally, insulation products have experienced extended lead times. This is most pronounced with mineral fiber insulation, which currently have lead times out beyond 200 days. Rockwool is opening a new facility in West Virginia this fall, which is expected to offer some relief towards the end of the year.
Petrochemicals in PVC
Petrochemical manufacturers in the Gulf Region account for 80 percent of U.S. production, and their products are primary ingredients for PVC. Over the past year, production has been disrupted by a series of complications ranging from explosions, Hurricane Laura, and most recently winter storm Uri. Ultimately, 80 percent of the petrochemical production in the U.S. was impacted. As a result, the lost production is estimated to reduce total output for 2021 by 10-12 percent. Production is ramping back up, but there are still some raw material constraints; however, most of the operational issues are expected to be mitigated by the end of April. Prices of PVC have increased rapidly as well, and large distributors have implemented price increases of around ten percent in February, followed by another five to ten percent increase in April.
Mechanical and HVAC Equipment
HVAC manufacturers are starting to see delays in the supply chain due to increased demand and workforce constraints in factories. In particular, Electronically Commutated Motor (ECM) fan manufacturers have extended lead times to 26 weeks; galvanized steel price and lead times have significantly increased; and flex conduit availability is becoming a concern.
Electrical Gear and Materials
Lead time for low voltage switchgear (less than 5kV) has extended to between 30 and 40 weeks. In some cases, capacity to generate submittals is further extending procurement lead times. Busway lead times range from 15 to 20 weeks and medium voltage switchgear lead times are between 18 and 24 weeks. Strong demand is expected to continue through the end of the year with further price increases expected because of rising manufacturing costs, including workforce constraints and rising cost of steel, aluminum and copper.
In March, crude oil surged to a 14-year high, and fuel prices rose accordingly. Almost three quarters of U.S. freight tonnage is moved by truck, and demand has remained strong even as surcharges continued to climb. Looking to the upcoming months, consumer demand has already started to shift away from goods as inflation impacts consumer spending. This change in consumer behavior is likely to continue driving transportation prices down, but until fuel prices retreat, it is unlikely that there will be much relief in freight costs. In addition to high fuel costs, wages have increased significantly as companies like Walmart and Sysco have introduced compensation packages for truck drivers that are greater than $100,000. Ocean Freight: There has been some relief in pricing for ocean freight, in part because of extensive lockdowns in China. In the short-term, lead times have not been impacted because ports are still partially operational. However, shipping capacity remains tight. There is concern that, once the lockdown is lifted, there will be a surge in cargo that strains capacity and further extends lead times.
To learn more about supply chain trends, reach out to Tom Park or Rob Cantando.
Prices are also going up for metals like copper, aluminum, nickel, iron and steel–all of which are significant exports from the Russia/Ukraine region. The price of pig iron has increased due to constrained supply; as a result prices for hot rolled coil (HRC) and structural steel are rising.
Scroll for more
Doors and Hardware
Elevators, escalators, moving walks
Building Control systems
Electrical commodity Materials
Lead Time and Price Snapshot
Click a category to view details
Trending Up Significantly
Logistics
Roofing
Roofing materials are typically procured as a complete package to be sure that all components are compatible and to allow roofing providers to warrant the total system. We have had some success with substituting certain materials to improve delivery dates, however, this takes a coordinated effort. It is important to work hand-in-hand with the roofing material supplier, the subcontractor, the design team and the owner. Some substitutions require design modifications. For example, replacing polyISO with polystyrene will typically result in the need for a thicker insulating panel to achieve the same R-Value.
The Logistics Managers Index (LMI) tracks key metrics—such as transportation, warehousing and inventory data —collected monthly from industry professionals. A value less than 50 indicates a contracting market, and above 50 indicates a growing market. The LMI for March was 76.2, which indicates significant expansion and is the highest reading to date. Demand for transportation and warehousing is keeping the index elevated.
Door hardware manufacturers have announced increases in the range of 5–11 percent during the first quarter of 2022. In addition, lead times continue to extend, with electronic access hardware being the most troublesome category. Semiconductor shortages are causing lead times to extend out to at least 20–25 weeks.
Copper prices have declined about ten percent from an all-time high in May of $4.90 per pound. This is caused by slowed growth in China’s economy, a stronger USD over the past two months, and rising COVID-19 cases globally. China also announced that it will sell 20,000 metric tons of copper at auction in early July in an attempt to help alleviate high prices. It is not likely that there will be long term relief on the price of copper. Top global copper producing nation, Chile’s, state-run mines were able to largely mitigate a planned strike in early June by increasing the wages of union workers. The wage increases, combined with a new bill being proposed by Chile to increase royalties on mining companies could keep the price elevated. In Peru, the second largest producer of copper, elections have caused uncertainty regarding copper prices. The presidential front runner has proposed royalties on copper sales in Peru, which could lead to additional price increases. The price of copper is currently expected to remain elevated throughout the year.
The Logistics Managers Index (LMI) tracks key metrics, such as transportation, warehousing and inventory data collected monthly from industry professionals. A value less than 50 indicates a contracting market and above 50 a growing market. The LMI has been slowly trending downward since it peaked in June 2021. However, the December reading of 70.1 remains just above 70, which indicates significant expansion. In addition to transportation, warehousing capacity is also constrained due to growing inventory levels.
Current Status:
6-12 Month Forecast:
Special considerations:
Many companies have announced insulation price increases: Johns Manville (25 percent on mineral wool products effective May 1), Rockwool (going from 12 percent on April 1 to 15 percent on May 16 for mineral wool product), Hunter (12 percent on polyiso insulation effective February 1), DuPont (8 percent on extruded polystyrene [XPS] effective Jan 4). The most significant lead time continues to be with polyiso, which remains in the 48-52 week range.
The key takeaway for August’s LMI of 73.8 is that transportation prices and utilization continue to grow. Peak transportation season is in full swing (with the holidays approaching), which adds pressure to a strained supply chain making relief early next year unlikely.
Roofing material lead times continue to extend. Roofing system deliveries can be as long as 10 months, depending on the materials specified. The toughest product to get is polyISO insulating panels. Lead times for polyISO are now greater than 10 months. In some cases, polystyrene insulation can be substituted for polyISO. However, many projects are taking advantage of this substitution and now polystyrene lead times can be as long as four to six months, depending on the source.
Ceilings, drywall, metal studs, flooring, paint, etc.
Plumbing
Lighting
Of all the challenges that logistics managers are currently facing, transportation prices and capacity are the most difficult. Volume of shipments are up across the board as consumers in the U.S. continue to buy goods, and ocean carriers do not have enough capacity to meet consumer demand. Spot rates for shipping containers remain elevated and costs for ocean freight are almost 400 percent higher than last year. Prices to ship a container from China to the west coast of the U.S. soared to more than $20,000 per unit in August as the container dislocations continue to create difficulties. Pre-runup pricing was $3,800 per unit.
Lumber pricing is driven mainly by housing starts, which were on the decline the first couple of months this year. However, starts rebounded in March to 1.725 million, but have cooled slightly to 1.572 million in May. Overall, the housing market remains very strong and most housing market analysts predict strong starts through the remainder of 2021.
The Logistics Managers Index (LMI) tracks key metrics, such as transportation, warehousing and inventory data collected monthly from industry professionals. A value less than 50 indicates a contracting market and above 50 a growing market. The average through January 2020 was 63.15, with the LMI trending down. The average from February 2020 to present is 66.31, indicating strong expansion. June-August 2021 were the highest three months since inception, with an average of 74.4, largely driven by transportation growth. The key takeaway for August’s LMI of 73.8 is that transportation prices and utilization continue to grow. Peak transportation season is in full swing (with the holidays approaching), which adds pressure to a strained supply chain making relief early next year unlikely.
Metal studs continue to escalate with Super Stud announcing a 10 percent increase as of October 1, 2021. This brings total inflation on metal studs to 100–120 percent since Fall 2020. After a quiet period for drywall pricing, new increases have been announced by many manufacturers (including USG, CTD and Nat. Gyp.) of 20 percent, effective in October. Poly ISO and polystyrene insulation also continue to escalate. Hunter (polyISO producer) has announced a 10 percent increase, effective Jan. 1, 2022. In addition, Dupont has announced a 10 percent increase on their polystyrene products, effective Oct. 1, 2021. Lead times for Rockwool’s mineral wool product is now exceeding 200 days, leading them to announce that they will continue to acknowledge new orders but will not provide delivery dates.
About Skanska's Strategic Supply Chain Team: Skanska’s Strategic Supply Chain Team leverages established relationships with major equipment and building material manufacturers to bring best value solutions to our projects and clients. Our direct relationships give us insight into the major supply chains feeding into the construction market. Since the outbreak of COVID-19, we have been working with our partners to closely monitor construction supply chain disruptions, lead times and impacts to market prices for materials and equipment.
What is LMI?
Demand for construction materials remains high. Some common and critical electrical equipment lead times are up to 70 weeks, the supply chain is being hammered by shortages in the following areas: metals, semiconductors, fabricated components and resins for plastic molded parts. This quarter, we’re experiencing new shortages for items like below-grade plumbing and high-purity process pipes, valves and fittings. Lead times for both ductile iron pipe and high-purity pipe are running eight to 12 months. Semiconductor fabs, pharmaceutical expansions and bio-tech manufacturing are driving demand for these materials.
With housing starts at the highest annual rate since 2006; an influx of data centers and crypto-currency mining operations; and countless new projects in the semiconductor, electric vehicles, life sciences and healthcare categories, 2022 will continue to be a year of unprecedented demand in the construction market. It’s apparent that suppliers will be challenged to meet demand, making the need for advanced planning greater than ever.
About Skanska's Strategic Supply Chain Team: Skanska’s Strategic Supply Chain Team leverages established relationships with major equipment and building material manufacturers to bring best value solutions to our projects and clients. Our direct relationships give us insight into the major supply chains feeding into the construction market.
(Includes fixtures)
RCP lead times are a minimum of three months, and specialty items like fire hydrants are running six to 12 months. Above-grade plumbing, valve and fitting inventory and lead times are stable. Distributors are striving to increase inventory to protect against stock outs in the face of continued strong demand. The war in Ukraine has driven up the price of raw materials and energy, which has resulted in a flood of price increases on all items since the beginning of March. More than 200 manufacturers have announced price increases since the beginning of 2022 averaging 7–10 percent.
High Purity Process PVF
This quarter we are adding high purity PVF due to the numerous semiconductor, pharmaceutical, biotech and higher education projects that require these materials. The demand is extremely strong, pushing lead times of high purity PVF as high as 44–56 weeks. Due to the war in Ukraine, the cost and availability of nickel has spiked, resulting in significant price escalation in this category.
High Purity Process Pipe, Valves and Fittings (PVF)
Lead-times described are after fully approved submittals and factory accepted release
U.S. Construction Employment
Construction employment continues to grow across the U.S. The number of national construction employees has reached an estimated 7.628 million in March 2022 (compared to 7.408 million in March 2021 and 7.549 in March 2020). Construction industry unemployment is hovering around 6 percent (compared to 8.6 percent in March 2021 and 6.9 percent in 2020) with approximately 364,000 current job openings and an overall estimated shortfall of more than 650,000 workers. Average hourly wages ended at $34.07 in March 2022 compared to $32.24 from March 2021.
Architecture Billings Index
Hover over the chart to see exact figures
This Architecture Billings Index (ABI) demonstrates whether or not architectural firms are billing for or signing new design contracts. The construction industry feels the impact of this index with a 9-to-12-month lag time.
The March 2022 ABI score of 58.0 shows continued growth and one of the highest scores since economic recovery from March 2020 began. Business is robust at most architecture firms with more than half of firm billings over the past year being from renovations, retrofits, rehabilitations, alterations, additions and historic preservation work. Firms in the northeast continued to report “softening billings,” but the midwest, west and south see robust levels of work. While backlog is at a new all-time high, firms have stated that “finding enough employees to complete these projects remains challenging.”
-50 =50 50+
Decrease in volume
Increase in volume
Neutral
Scoring:
Skilled Labor Index and Common Labor Index
The ENR Skilled Labor and Common Labor indices measure growth in union wages for select trades. The five-year growth trend has been stable. As the industry continues to feel the pressure of unfilled jobs, organized labor will have the upper hand in contract renewal negotiations. We anticipate above-normal wage increase trends going forward through this inflationary period.
Construction Spending and Dodge Momentum Index
Year-to-date, nonresidential building construction starts are 26 percent higher than the first three months of 2021 ($73 billion in 2022 compared to $58 billion in 2021). According to Richard Branch, chief economist for the Dodge Construction Network, “Nonresidential construction has benefited from the growing confidence that the worst of the pandemic is in the rear-view window. The pipeline of projects waiting to start continues to fill, suggesting this trend will continue.”
Construction, Architecture and Labor Indices
Spending
Employment
Labor
Source: U.S. Bureau of Labor Statistics
Source: U.S. Census Bureau and Dodge Data & Analytics
Architecture
Source: AIA
Click on the chart to see exact figures
Construction, Architecture and Labor Indices
Read the full ABI Report for March 2022 here.
Construction Materials and Commodities Pricing
As we entered 2022, we had reasons to be optimistic about supply chain relief at some point this year. However, the Russian invasion of Ukraine has squarely impacted this optimism. The interconnectedness of economies and businesses has exacerbated the supply chain crisis and, to some extent, masked it. According to Dun & Bradstreet, there are fewer than 15,000 Tier 1 suppliers in Russia. Dig a little deeper, however, and there are 7.6 million Tier 2 supplier relationships with Russian entities globally. More than 374,000 businesses—90 percent of which are in the U.S.—rely on Russian suppliers. Coupling the interconnectivity of economies with the enormous demand for products, material prices and lead times continue to increase.
Piping
Lumber and Wood
Metals
Oil, Gas and Fuel
Drywall, Gypsum and Insulation
Concrete and Cement
Pipe Producer Price Index
Polyvinyl Chloride (PVC) Pipe Average prices jumped 12% since last quarter driven primarily by higher oil prices. Copper Pipe Average prices were up 3-4% over the past three months, as the cost of copper continues to climb. Carbon Steel Pipe Average prices were flat, rising less than 1% since last quarter.
From a low of $1.87/gallon of unleaded gasoline in May of 2020 to a record average price of $4.22/gallon through the end of Q1, fuel prices are impacting everyone. The Russian invasion of Ukraine launched energy products into a sudden climb. The cost for a barrel of oil is 90 percent greater than at this same time one year ago. Many trade contractors are claiming relief from these extraordinary increases, citing unforeseeable events that have occurred amid fixed price contracts.
Aluminum Aluminum prices remain 30% higher year over year, down from a record high in March 2022 as reduced demand from China (lockdowns) and Japan (weak demand in automobile sector) mitigated worries of supply disruptions from the Ukraine war.
Zinc Zinc prices have continued to rise and are up over 57% year over year. Inventory levels remain low, and output is down due to rising energy costs as a result of the Ukraine war.
Nickel Nickel prices surged in early March as a result of a short squeeze on nickel futures. Since then, prices have retreated but remain up over 149% year over year. Prices will likely remain elevated.
Copper Copper prices hit a new all-time high of $5 a pound in March as inventory levels dropped. Although outlook for 2022 had initially indicated a surplus, top copper producer Chile has seen decreasing outputs, which has contributed to the elevated price.
Lumber and Wood Products
The up and down lumber market is now pointing downward once again. Both dimensional lumber and panels are declining quickly. Dimensional lumber is down 25 percent since it peaked in early March. Panels are also down 21 percent since the March peak.
Structural Steel Shapes and Rolled Bars
Structural steel pricing has started to climb after a relatively quiet period from December to March. From March to April, structural steel pricing per ton is up 8 percent to 15 percent. The disruption in supply of pig iron from Russia and Ukraine has been cited as a contributing factor. Lead times are holding steady for now.
Asphalt Product Pricing
Asphalt pricing is historically impacted by fuel pricing and seasonal/regional conditions. So, given the recent increase in oil price, it is no surprise that asphalt prices are climbing. In some situations, it may make sense to share the risk of asphalt contracts with the trade contractor to lock in pricing at a reasonable rate connected to an index with an adjustment at the time of installation purchase.
Gypsum, Drywall and Insulation
Drywall pricing continues to climb with USG announcing an increase of 30 percent effective January 1, 2022. Demand continues to outstrip supply, as both commercial and residential construction markets remain strong. Rising interest rates may cool the housing market; however, some analysts point to a deficit in “for sale” inventory that may continue to drive new construction. Mineral wool insulation products also continue to rise: Johns Manville has announced an increase of 25 percent effective May 1, and Rockwool has announced a 15 percent increase effective May 16.
Click the icons to view interactive one-year index or pricing trends.
Source: U.S. Energy Information Administration
Source: U.S. Bureau of Labor Statistics PPI
Source: Engineering News-Record and U.S. Bureau of Labor Statistics PPI
Source: Kitco
This chart shows a one-year trend of pipe producer price index. Polyvinyl Chloride (PVC) Pipe Average prices continue to rise, up eight percent since Hurricane Ida struck the Gulf Coast in August and up 48 percent year-to-date. Copper Pipe While raw copper costs have stabilized, the price of copper pipe continues to increase, up more than 32 percent since January 2021. Carbon Steel Pipe Average cost of carbon pipe is also up more than 60 percent year-to-date due to increased costs of raw material and transportation.
This graph shows a one-year trend of key metals by price per pound (lb).
This graph shows a one-year trend of key lumber and wood products in terms of producer price index.
Paving Asphalt PG 58 is a Performance Graded (PG) asphalt derived from specially selected crude oils via carefully controlled refining processes. Paving Asphalt PG 58 product is recommended for road construction. Asphalt WPU058102 represents the Producer Price Index of Asphalt and Other Petroleum and Coal Products reported by the U.S. Bureau of Labor Statistics.
This chart shows a one-year trend of pipe producer price index.
Cement is in short supply in some markets, with demand at historically high levels, the U.S. is more heavily dependent on imports. Turkey, a large cement exporter, is being hampered by very high energy costs because of the war in Ukraine; kilns are being shut down, and it costs more to produce cement than the cement can be sold for. These conditions are leading to allocation and cost escalation in some markets in the U.S. Ready mix suppliers are not only feeling cost pressures from cement, but also from escalating fuel prices and driver wages. As a result, the cost of ready mix is increasing 10 percent or more in certain markets.
Connect with us
Click to download
Download the full Skanska USA Building Spring 2022 Construction Market Trends Report
Q4 2020 Report
Q1 2021 Report
Q2 2021 Report
Previous Market Trends Reports
Steve Stouthamer
Contact Steve
Contact David
Contact Tom
Contact Sarah
David Formichella
Executive Vice President of Project Planning
Preconstruction Coordinator
Vice President of Strategic Supply Chain
Director of Strategic Supply Chain
Director Business Planning and Strategy
Robert Cantando
Sarah Vakili
Tom Park
Contact Us
Visit our website
Previous reports
Contact Robert
Q3 2021 Report
Previous Reports
Q4 2021 Report
August 2022
Sign up for next session
Join Skanska’s in-house project planning and supply chain experts each quarter as they recap current construction market trends and discuss future outlooks, including where signs of recovery are starting to show.
Next Webinar:
