Construction activity up but material prices remain flat.
Construction activity is healthy, with both the private and public sectors ahead by 9-11% over last year. The equilibrium between these two sectors bodes well and appears sustainable for the near future. Money is cheap and financing is unlikely to get much better. Housing starts are also good, but not at the level of 10 years ago. Inflation is low and economists project several more years of flat prices. Prices are down for almost all construction products with the exception of lumber.
Last year it seemed that stainless steel had found its floor after losing 25% of its price since lofty highs of 2011 to 2012. This component may have finally bottomed out. Stainless is now equal in price to what it was ten years ago. Carpet prices are not likely to see an increase this year. After being up 4% last year, common brick has leveled out with a gain of 1%. While it is still down from 2008 levels, brick is making a comeback and may catch up to 2008 in the near future. After significant increases from 2010 to 2012, paint is now selling in a tight range and may have flattened out. Although framing lumber is up 10%, plywood is down 2%. Prices for plywood and framing lumber no longer seem to move together.
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|Title Annotation:||FM COST TRENDS|
|Comment:||Construction activity up but material prices remain flat.(FM COST TRENDS)|
|Date:||Jun 1, 2016|
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