What We’re Reading: Q1 2024 Construction Costs
April 6, 2024
While Washington’s builders work hard to provide homes for the people of Washington, the Building Industry Association Washington staff just finished reading the Q1 2024 Construction Costs Report by RSMeans data from Gordian.
BIAW subscribes to RSMeans data to inform its studies into construction costs in Washington. Using this information, as well as information from a number of other sources, BIAW’s Policy and Research Manager Andrea Smith produces regular reports about homebuilding and construction in Washington and publishes them at the Washington Center for Housing Studies.
Here she gives a look at the latest data on construction costs.
Q1 2024 Construction Costs Report
Researchers expect costs to remain stable through 2024, though challenges exist.
Energy and electrical costs increasing in most areas
Builders will likely see longer lead times and cost increases for HVAC and electrical equipment. Think generators, switchgear and transformers. On the other hand, conduit and copper electrical wire are not expected to see much variability.
Prices for fiberglass insulation are escalating due to ongoing shortages and increased demand, primarily driven by energy code requirements. Since the second quarter of 2021, the cost for blanket fiberglass insulation has increased nearly 90%. Expect this to worsen as more states adopt the 2021 International Energy Conservation Code and as more households utilize insulation tax credits as part of the Inflation Reduction Act.
Concrete prices peak
Prices for concrete products are at a peak and don’t show any sign of decreasing. This is mainly caused by high demand and restrained product availability, as raw materials such as sand are in short supply.
Delays of up to 18 months for certain products, such as those listed above, could potentially extend overall project schedules.
Lumber costs low but could rise
Lumber costs are at their lowest since summer 2020, but wildfires in North America could reverse that trend.
Most materials stable but labor costs increase
The Historical Cost Index tracks changes in the cost of construction materials and labor installation (including plumbing, electrical and HVAC) to help industry anticipate and plan for changes in construction costs. Of note, WA can expect stabilization of most material costs, while seeing an increase of 4.04% in labor installation.
In summary, the construction industry should expect to see material pricing where government policy drives demand. Expect to see high-efficiency, low-emissions materials remain elevated for the foreseeable future.
For more information, contact Policy and Research Manager Andrea Smith at AndreaS@biaw.com or (360) 352-7800 X 114.