Construction costs escalate

New construction costs are continuing to increase. From January 2004 to February 2005, new construction costs have increased 10.6%, mainly due to material price increases. Whereas materials used to account for 50% of construction costs, materials now represent 55% of total costs.

The largest price increase has been with steel products. Since January 2004, steel mill products have increased in price by 46.2%. Other cost increases in the past 13 months include:

Gypsum (includes wallboard) 20.9%
Lumber & wood products 11.4%
Millwork 6.0%
Cement 11.2%

Generally, new construction costs were increasing less than inflation or more or less in step with it until 2004, when prices starting shooting skyward.

These price increases are sure to have a significant impact on the feasibility of many new LBE projects.