Biden’s Infrastructure Boom Is Being Held Back By High Construction Costs
With the possibility of inflation going down, it could go a long way toward helping U.S. construction projects in the future.
According to Yahoo Finance, construction projects continue to struggle under high material costs, causing delays and increased project expenses. According to research from Gordian, construction materials have seen significant price increases since 2020. This accounts for around 82.5% of materials affected. Meanwhile, construction news outlets report that metals like steel and aluminum have experienced substantial price hikes (long-term wise).
Supply and demand imbalance remains the primary factor in these elevated costs. The COVID-19 pandemic significantly disrupted global supply networks, resulting in raw material shortages and higher transportation prices. As the global economy continues to recover from the pandemic and construction activity grows, the heightened demand for construction supplies could lead to even more price increases.
This material price volatility introduces more uncertainty to building projects, making it challenging for contractors to forecast project costs effectively. And despite recent price decreases, overall building material costs remain significantly higher than pre-pandemic levels. According to the Associated Builders and Contractors (ABC), construction supplies are still 37% more expensive than before the pandemic. This indicates the long-term influence the pandemic continues to have on material costs, which will also impact the industry going forward.
