As we step into 2024, the industry continues to witness shifts in purchasing trends that significantly influence the way projects are conceptualized, planned and executed. We’re delving into the forefront of innovation and highlighting the emerging trends that are shaping the choices and preferences in construction material procurement.
We spoke with two of our purchasing experts: Holly Sievers, director of Commodity Purchasing at CBUSA, and Joe Starr, vice president of Purchasing at CBUSA. Here, they share their take on what can be expected for buying lumber and other construction materials in the new year.
What key fluctuations in lumber should builders consider when strategizing for 2024?
Lumber prices often fluctuate, and it’s important to understand why this happens. It all has to do with supply and demand, which are necessary for determining the balance of pricing commodities in the market.
“The price of lumber is determined by the interplay between supply and demand,” Holly said. “When supply and demand are in equilibrium, the market price is stable, as in the consistent state that we’ve enjoyed for the last year with trading levels between $350-$500/m. However, when there is an imbalance, prices can fluctuate.”
There are key factors of supply to consider such as timber availability, mill capacity, regulation, weather patterns, labor force and economic conditions. Demand, on the other hand, represents the quantity of lumber that consumers or businesses are willing to purchase at different price points.
“Economic conditions such as GDP growth, employment rates and consumer confidence can impact construction activity and, by extension, lumber demand,” Holly said. “Population growth, global trade and infrastructure projects all play a role as well.”
These are all things to consider as builders start prepping for projects in 2024.
What can builders expect from the lumber market heading into the new year?
Supply and demand can change rapidly in response to economic, environmental and political factors. Most recently, for example, the COVID-19 pandemic, wildfires and supply chain disruptions have all contributed to fluctuations in lumber prices.
“As we look ahead to 2024, unless there are any unforeseen catastrophic events, the lumber market should remain fairly stable without any considerable mortgage rate decreases,” Holly said. “Varying opinions of economists seem to be that 5%-6% rates will be the trigger that pulls home buyers off of the sidelines and back into the game. Once we see home sales start to increase with lower interest rates, there will be a domino effect, not just with lumber costs, but with all building materials. Demand will outpace supply, creating potential for a runaway.”
What are the key factors driving changes in construction material purchasing trends for 2024?
There’s volatility in the current market being felt by everyone. And the construction industry, especially, is sensitive to changes in the economic environment. There are several factors within the economic landscape that can significantly impact the construction industry and material buying.
“Some key factors that will continue to impact purchasing trends into 2024 and beyond include but aren’t limited to mortgage interest rates, material costs, labor market dynamics, government policy and regulatory changes,” Joe said.
This is why it’s critical for builders to use strategic planning while navigating the evolving economic conditions in order to ensure the success of their construction businesses.
How are price fluctuations and inflation impacting the budgets and strategies of construction projects, and how can professionals adapt to these challenges in 2024?
Price fluctuations pose significant challenges to construction projects by impacting material costs, labor expenses and project timelines. However, there are ways for builders to combat these challenges and ensure successful project execution within budget constraints.
“Material costs and inflation will continue to have a significant impact on the new residential construction industry,” Joe said. “This will pressure builders to implement a variety of strategies from reducing square footage, simplifying design elements and decreasing the specification level of finishes to offset the associated increased costs.”
What sustainable and energy-efficient practices are becoming more important in construction, and how do these influence the selection of materials for projects?
Sustainable and energy-efficient practices have fundamentally shifted the criteria for material selection in construction projects.
“With the implementation of more rigorous energy codes, we’ll see an increase in the performance requirements of exterior walls driving a need for more insulation.,” Joe said. “There will be a broader use of products such as exterior continuous insulation, high-density batts, open/closed cell spray foam and varying combinations of these products.”
The integration of these practices not only aligns with environmental goals but also drives innovation, regulatory compliance, market demand and long-term cost savings, making sustainable materials a cornerstone of modern construction projects.
Let CBUSA help with managing economic challenges and higher material costs
CBUSA can help home builders navigate affordability challenges and swings in the market through group purchasing.
As a member of CBUSA, you’ll have the purchasing power of a national builder, a higher bottom line from material rebates and access to a network of like-minded builders who want to share best practices.
Ready to get started? Send us an inquiry today.
