Costs Resist Demand Push By Tim Grogan C osts are resisting the demand push of some strong construction markets that are in their seventh year of growth. Powerful markets are generating peak demand for many materials. In particular, shipments of both portland cement and lumber are close to last year's record levels. However, few materials are responding to the temptation of strong demand with equally strong price hikes.
Inflation is the same but markups are getting bigger.
Instead of going in just above costs they are actually trying to make some money. However, almost universally, the level of construction activity in regional markets continues to create cost pressure on the labor component, which has resulted in increases to overall construction costs. In contrast, union wages are increasing at a relatively slower pace. The union increases are less, percentage wise, because they start from a higher base. Many contractors interviewed say they are surprised not by how much prices have gone up, but by how many have gone down.