Builders' Blues: Soaring Prices Hammer Construction Industry

Strong housing activity is driving demand for building materials that is resulting in a shortage of supplies and increasing prices.

A report from John Burns Research and Consulting researchers Chris Beard and Matt Saunders found that roofing and insulation materials particularly are in short supply, with some manufacturers not able to meet demand. Areas hard-hit by storms are struggling to keep up with the demand for roofing materials.

Compounding the problem is that manufacturers have not added much capacity to produce materials, and bringing new facilities online often takes years.

John Burns found price increases announced over the past two months from most manufacturers include:

• Roofing: 5% to 8%
• Insulation: 6% to 10%
• Gypsum wallboard: Up to 20%

Window and door manufacturers also are considering price increases in 2024, according to the preliminary results from John Burns's Window and Door Industry Survey, which will be released Oct. 31.

"As we enter fall, construction costs show no sign of dropping, further inflating an already pricey housing market," Beard and Saunders wrote in a recent John Burns newsletter.

Concrete and related products had some of the highest growth rates in June compared to the previous year. Cement and most concrete products also had double-digit annual price changes, according to a Statista Research Department report.

Cement accounts for about 7% of total greenhouse gas emissions, making the sector among the largest contributors to greenhouse gas emissions on Earth, according to a McKinsey & Co. report, which found that global cement production volume will remain stable until 2050.

Overall, the largest emitter of greenhouse gases is the buildings and construction sector, which accounts for 37% of global emissions. Producing and using materials such as cement, steel and aluminum come with a significant carbon footprint.

Start generating passive income through real estate

Check out these featured investments from Benzinga's Real Estate Offerings Screener.

While emissions created from heating, cooling and lighting buildings are projected to decrease from 75% to 50% over the next few decades, solutions for carbon emissions from design, production and deployment of building materials such as cement, steel and aluminum are lagging, according to the UN environment programme's report Building Materials and the Climate: Constructing a New Future.

The UN report suggests three overarching strategies that should be implemented to decarbonize building materials:

• Avoid unnecessary extraction and production
• Shift to regenerative materials
• Improve decarbonization of conventional materials

"By implementing these strategies jointly, we can pave the way for a greener, more sustainable built environment, aligning with our global climate objectives," the report states.

Read Next:

• This REIT just teamed up with the company that built Elon Musk's tiny house to develop affordable housing communities. Here's how you can be among the first to buy shares.
• Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's how to collect $1,000 per month from Buffett's favorite dividend stock.