Wednesday, January 20, 2021

The Rising Cost of Building Materials for Real Estate


As building material prices and demand for houses increased throughout the year, total construction spending on residential housing rose to almost $667 billion.

These building material prices rose 5.4% in 2020, led by a jump in lumber costs due to an interruption in production at the start of the pandemic, which limited supply. High housing demand and weakening of the U.S. dollar also contributed to the increase.

The charts below show the trend in building material prices since 2015.


Lumber prices reached historic peaks this year, but those prices have been volatile. This year’s price index has been roughly four times as volatile as it was during the recessionary years of 2008 and 2009.

Softwood lumber prices rose by 12.5% in December following a 23.9% decline over the prior two months.

Ready-Mix Concrete

Ready-mix concrete prices rose by 0.7% in December, after a drop of 1.1% in November.

Gypsum Products

Prices for gypsum products, such as drywall and ceiling tiles, bounced around during the year until surging by 4.8% in November. They ended the year about 0.9% higher than December 2019.

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