b'COVER STORYESCALATINGCOSTSOFCONSTRUCTION MATERIALSWILL UNSTABLE MATERIAL COSTS BE THE NEW NORM? By Warren HeeleyTHE CONSTRUCTION INDUSTRYThough pricing is more stable atIn addition to rising new housing starts, is reeling from the enormouspresent, there is still uncertaintyfamily savings rates since the start of price increases in material costs sinceabout future pricing for constructionthe pandemic increased from eight per the COVID-19 pandemic hit in Marchmaterials, says John Mollenhauer, TCAcent to 30 per cent, which along with low of 2020. These increases are creatingpresident and CEO. Unstable pricing is ainterest rates fired up home purchases havoc for construction contractors tryingpotentially fatal scenario for constructionand renovations, says Alex Carrick, chief to manage project contracts. Is this thecontractors working in a design-bid-buildeconomist for ConstructConnect Canada. new normal for materials pricing or willmarketplace.the industry see a return to more stableBy May 2021, lumber prices saw their pricing in the future? THE NUMBERS largest increase during the pandemic. By March of 2021, StatsCan IndustrialThe cost of residential building After more than 10 years of stableProduct Price Index (IPPI) recorded anconstruction increased by 5.6 per cent pricing for wood, steel, concrete andincrease for lumber and other woodin the first quarter of 2021, the highest other key materials, supply concernsproducts of 68.2 per cent from Marchquarterly increase since data began erupted in the first months of theof 2020. A key factor was the increasedbeing collected in 2017.pandemic as factories around the worlddemand for housing in the U.S. (+20 per were closed because of COVID-19.cent) and Canada (+40 per cent) and The IPPI year-to-year increase in March This led to a pricing spike in materialsthe inability of the production sector2021 was 10 per cent with the index that worsened as the infection wavesto keep up with demand during therecording four consecutive months continued into 2021. pandemic restrictions.of increases from December 2020 to 14Quarter 32021 BUILDERSDIGEST'