Inflation and Geography Post-Virus Construction Economics

At the 2021 NAHB Association Management Conference Robert Dietz, Ph.D. and NAHB Chief Economist shared some new graphs and information coming from national. These economic plans are meant to guide building industry members through the coming months in regards to what NAHB economist see on the horizon. Unfortunately, we can not truly say this is a “Post-Virus” plan as the Delta Variant of COVID-19 is now sweeping the nation. What we do know is that Builders continue to be deemed essential workers and therefore will need continuing information and guidance in the end of 2021.

While the overall GDP has recovered it is still trailing the Pre-2020 trend. This can be focused on many factors, but the job market is certainly not helping. Businesses are reporting more than 9 million open jobs nationally.

Inflation pressures are building as the economy recovers in 2021, but no Federal hikes are expected until 2023. Interest Rates are trending higher though, as the economy begins to recover.

In regards to supplies for the industry, there is some light at the end of the tunnel.

Lumber Prices are coming back down! Not to pre-pandemic levels obviously but the costs are seeing a big turn. Don’t expect to see these prices currently on the market though. Many suppliers bought their lumber at the higher prices, and will need to sell that at the old price to get their returns. Hopefully within the next few months you will be able to see that price cut.

There have been other increases in supplies though with Steel prices increasing 75% in a year; copper 59%, aluminum 61%, and gypsum 15%. This all puts construction costs in general still high.

In regards to Construction outlook we are seeing choppy growth ahead, moving back to long-run trend. Buncombe county does appear on the map in regards to single family construction for small metro areas.

While the 10 largest Top 10 Largest SF Markets December 2020 go to:
1. Houston-The Woodlands-Sugar Land, TX
2. Dallas-Fort Worth-Arlington, TX
3. Phoenix-Mesa-Scottsdale, AZ
4. Atlanta-Sandy Springs-Roswell, GA
5. Austin-Round Rock, TX
6. Charlotte-Concord-Gastonia, NC-SC
7. Tampa-St. Petersburg-Clearwater, FL
8. Orlando-Kissimmee-Sanford, FL
9. Nashville-Davidson-Murfreesboro-Franklin, TN
10. Washington-Arlington-Alexandria, DC-VA-MD-WV

Remodeling is growing as well. Mostly due to a variety of factors including staying at home and realizing things they want updated facilities.

If you have any questions for feedback on what you see in the market let us know!