Rising Construction Costs

If you have been in the market for a new house or pay any attention to the economy, you have likely heard that construction costs are on the rise. While COVID-19 seems the likely culprit, what exactly is causing this phenomenon?

Low Supply, High Demand

The increased cost of construction materials can be largely attributed to supply chain disruptions from COVID-19 shutdowns. The virus forced many plants to either pause or terminate their production of construction supplies. In addition to the resulting decreased supply, the economy also faced an increased demand for construction. Many people and businesses began looking for ways to construct more indoor and outdoor space to ensure health safety standards. The housing market continues to see an increased demand as many need additional space for offices and schooling. This combination of decreased supply and increased demand created a recipe for heightened construction prices. According to Cummings, an industry-leading consulting firm, wood prices have increased 56%, copper and brass over 30%, steel over 10%, and concrete over 4%, all within the past year.

The Texas Freeze

The deep freeze that hit Texas in mid-February also contributed to rising construction costs. Almost all plants that supplied the raw materials for plastics used in construction were either damaged or shut down. As supplies depleted, the freeze also burst thousands of PVC pipes which heightened demand. Construction material costs subsequently continued to rise.

Trade Policies

Trade policies enforced from 2018 to 2020 was yet another reason for tighter supply and higher prices. Tariffs and quotas on materials like steel drove up the cost of many construction products and reduced the number of suppliers. Lumber costs have also rose due to the non-renewal of a longstanding softwood lumber agreement with Canada.


While there are many predictions as to when, and if, prices will go down, it is likely the cost of materials will continue to rise or stay stagnant for at least the rest of 2021.

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