Building Material Prices on the Rise

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Building Material Prices on the Rise – US-Canada dispute partly to blame

Contractors, prices are going up. Softwood lumber, gypsum, ready-mix concrete have all seen rising costs in the last two months, according to the Producer Price Index (PPI). Of the rising costs, softwood lumber is demanding the highest tag. Softwood has risen 2.3% in march, and 4.8% in February. This brings us to a 7.2% increase since the beginning of 2017. So, what’s up with the increase? Most, if not all of it, is due to the US/Canada softwood lumber trade dispute.

Dispute Summary: The Canada-US trade dispute has been going on since the 80s. The idea is that most of the Canadian lumber produced is government owned. Therefore, prices are set administratively, rather than fostered through competition and the marketplace. The problem? This is the opposite of how the United States operates. In fact, it pretty much goes against how the US operates in general. In the states, lumber production is done privately, with prices fluctuating depending on supply and demand. The tariff essentially brings Canadian lumber pricing back up, to make it competitive with US production. Otherwise, Canadian lumber would undercut US suppliers.

Various softwood products have seen a sharp increase in cost this year. Many products have seen a price increase of 25%. Below is an illustration of the Random Lengths Framing Lumber Composite Index – showing an increase of 16% in the same period.

lumber

Contractors, make sure you understand the latest pricing for your area. You can lose big if you don’t keep up to date with the trends. An inaccurate estimate can cost you thousands. This is why our software updates material pricing every three months, to ensure you have the latest and most accurate pricing for your area.

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