Growing Demand for Materials
The price of raw materials is on the rise for numerous reasons. There is a correlation between environmental regulations and shifting demand, as well as tariffs and trade concerns, in driving up prices. Lumber, steel, gasoline, and iron are all commodities that have suffered significant price hikes in recent years, making them less attractive options for many construction projects. The price of crude oil increased by 49%, timber by 29%, and iron and steel by 14% in only a single year.
While some businesses work closely with contractors to reduce costs during the pre-development stage, their estimations may need to be corrected once the project begins due to the quick nature of pricing changes.