Price hikes.
Long lead times.
Labor shortages.
Delays.
When we looked ahead to 2023, these were the issues facing the building materials industry.
As this year gets off to its start, it’s natural to wonder about the building materials industry outlook for 2024. The last few years have been challenging. Will this year be the same?
In looking at the year ahead, there are indeed some differences both building components manufacturers and contractors should plan for to remain agile and adaptive.
6 Challenges for the Building Materials Industry Poised to Continue Into 2024
Though 2023 was an easier year than the three preceding, it was not without challenges. To be sure, navigating this past year was not impossible – it just required some creative thinking and patience at times.
Among the most impactful challenges in the building materials industry’s outlook 2024 include:
- Materials costs
- Transportation
- Supply chain issues
- Labor shortfalls
- Changing codes
- Interest rates
1. Materials Costs
Last year saw some welcomed reprieve for builders.
Compared to previous years, price increases for materials such as lumber, drywall, steel, etc., slowed down. All told, 2023 building material prices went up nominally month-over-month by 0.23%. That’s a big difference from price spikes seen during the pandemic years.
The modest increases in building materials were reflected in similar increases for projects such as new home construction. Compared to 2022, the average cost to build a new home in 2023 went up by roughly 8% depending on location.
What should you expect this year?
Increases, but nothing astronomical and more in line with traditional year-over-year increases.
There is good news, however. Economists are predicting building material costs – and total costs to build – to go up between 2-4%.
2. Transportation
On the transportation front, last year also brought about some relief from high transportation costs – all still pandemic-related.
This year, it’s a less rosy picture, and one that’s hard to see clearly. In light of a potential “freight recession,” industry analysts offer a mixed bag of predictions for freight costs, with some calling for a 15% reduction in costs and other seeing a 5% increase.
However, all agree that 2024 won’t include budget-busting hikes.
Fueling costs, on the other hand, are anticipated to go down. According to GasBuddy.com’s annual forecast, gas prices are expected to go down by about 13 cents in 2024. This will be the second straight year of gas price declines.
3. Supply Chain Issues
Both international and domestic supply chains have been plagued by an unprecedented slowdown met by increased consumer demand.
On both the raw materials and commodities sides of the equation, the supply chain has been characterized for the last several years by:
- Long(er) production times
- Delayed deliveries
- Higher prices
These same factors are again expected to impact the 2024 supply chain, but not to the same degree as they did. In other words, things are continuing to ease up.
However, new issues are affecting the supply chain and they are worth noting for 2024:
- Ongoing conflicts – Ukraine, Israel
- The electrification of transportation
- Global recession concerns
4. Labor Shortfalls
Another component also directly impacted by the pandemic is the shrinking labor pool.
According to the most recent figures, the construction industry – which includes building materials suppliers – had more than 650,000 job openings this past summer. Making matters more challenging was the number of skilled workers leaving the job market far exceeded the number of those coming in.
With a limited labor pool and skilled workers coming at a premium, building material orders meant longer lead times and higher prices, which eventually made their way to the end user.
Looking ahead, the labor market is expected to be tight during the next year.
5. Changing Codes
A quieter element with a wide impact, changes in building codes also affected the building materials industry in 2024.
For instance, the end of 2021 saw major adjustments to the International Residential Code, which opened the doors to new building requirements in 2022. For building material manufacturers, that meant adjusting processes and products to meet new regulations.
Updates to building codes and material standards are nothing new and they happen like clockwork. This upcoming year won’t be any different.
6. Interest Rates
One of the biggest impacts on building projects of any sort, interest rates are again expected to be something builders should keep an eye on.
While it seems like a moving target, rates are expected to go down this year.
Still, many builders are planning for higher rates
And stilll, construction spending is expected to remain as it has been.
Meeting Building Materials Industry Outlook Challenges of 2024 & Beyond
Regardless of global events, every year will have its challenges for any industry.
Issues in the building materials industry ultimately make their way to the property owner, whether it’s in the form of a higher bill or a longer project schedule. For the contractor – who often serves as an intermediary between the building supply industry’s challenges and a client’s expectations – simplifying and streamlining processes is key to maintaining a steady and predictable workflow.
Having a building materials supplier as a partner opens the doors to savings and protecting the integrity of a project’s timeline through:
- Material savings – Often purchasing in bulk, a building components manufacturer buying power from volume helps you be as cost-effective as possible with a project. In addition, a manufacturer uses precise equipment to fabricate building components, limiting the number of materials needed for an order of items like prefab wall panels or prefab trusses.
- Reduced transportation costs – A one-stop shop of sorts, a building components manufacturer saves you the trouble of going to multiple suppliers to source materials. Instead of paying for multiple deliveries from several suppliers, you’re only dealing with a single entity.
- Streamlined construction – Prefabricated structural components – such
as roof trusses, floor trusses, prefab decks, and prefabricated wall panels – are made for fast construction. Oftentimes, components are part of a construction system developed by the manufacturer, such as our Fast Track Framing System. When part of a project, building component construction systems allow for faster builds with fewer workers.
- Supply chain management – To make the structural components of your project, a components manufacturer has its own supply chain to manage. Instead of you, they’re working with suppliers and navigating any issues that come up.
Ultimately, a partnership with a building components manufacturer means your business has another support system in its corner actively working for your success.
Meeting the State of the Building Materials Industry on Your Terms
The building materials industry is like any other – it’s reactive to market conditions and global events.
While it’s impossible to predict exactly how any year will shake out – familiar challenges or brand new ones – understanding potential impediments and having the right partnerships in place helps you meet each year head-on.
Add North American Truss to Your Team
As a building components supplier serving the Western and Central New York regions and beyond, we understand the needs of local contractors. Our team of dedicated professionals is ready to get to work with your company today. Contact us today to learn more about our services and panel construction method.
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