Building materials costs keep climbing
By William Sluis
Tribune staff reporter
Published June 27, 2006
chicagotribune.com
Costs for building materials continue to soar, and there will be little relief for home builders and construction contractors barring an unlikely global economic slowdown, an industry economist said Monday.
While overall U.S. inflation is up about 3 percent to 4 percent in the last 12 months, prices for materials have risen 7.8 percent and transportation costs have jumped 16 percent, said Kenneth Simonson, chief economist of the Associated General Contractors.
Cement, in particular, remains in short supply, and China has become America's No. 1 new source of the critical construction material, he said.
"China has built several new world-class cement factories, while we haven't built one in years," Simonson said.
Meanwhile, the cost of copper has surged 88 percent over the most recent 12 months, and steel supplies remain partially dependent on imports, he said.
"Copper is needed for wire, pipe and other plumbing materials, and there is no end to the rise in prices," said Simonson, who spoke to trade groups in Chicago and Elgin.
An industry group estimated recently that there are about 440 pounds of copper in a new 2,100-square-foot single-family home, including about 200 pounds in wire and about 175 pounds in pipes and plumbing fixtures.
Other analysts said recently that the gypsum products used in drywall have climbed about 24 percent in the last year, asphalt shingles for roofing 19 percent, and ready-mix concrete for foundations 12 percent.
An exception to the price rises is framing lumber, which has stabilized after rising sharply in 2004 and 2005, according to Simonson. Recent figures show its price is down about 5 percent, while plywood is down 2 percent.
Simonson said one of the most worrisome increases is in transportation costs.
"Shipping rates have soared, because the railroads are clogged with goods and truckers are backed up with loads," he said. "There is no way to reduce the need to get goods to construction sites, and builders can't do much to cut back on materials. They are considered a fixed cost of doing business."
As the construction boom continues, he added, builders still are adding jobs. |
