Considering the current economic situation, there are several key trends in the construction materials market. Among them are the low housing stock, low mortgage rates, Modularization and Prefabrication. These trends will have a bearing on the future of the construction materials market. Let’s have a closer look.
Low housing stock
The construction materials market is expected to grow at a healthy pace next year, with revenue for the single-family construction industry expected to rise by 25% next year. However, the current low housing stock market may present a buying opportunity. In October, construction costs rose 12.3% from a year ago, reflecting a materials squeeze that could ease in the coming winter. At the same time, residential investment declined for the second quarter in a row, and the final three months of the year are expected to be subdued.
A shortage of homes is pushing home prices higher in the U.S., and the supply of homes is nearly four million homes below the demand. This has caused home prices to rise by as much as 30 to 40% in the past two years. The lack of housing supply also comes amid low mortgage rates, which have driven prices up. Meanwhile, supply and demand could take another decade to equalize, unless the shortage is resolved.
Low mortgage rates
Mortgage rates are currently at a historically low level. This has been a significant boon for the construction materials market business, as rising mortgage rates would have stymied the demand for housing. However, the effects of elevated interest rates could begin to hurt the housing market by the second half of 2022. A recent increase in interest rates could push down housing demand and reduce the number of new construction projects.
The rapid increase in mortgage rates has slowed in recent months, but the general trend is still higher than in 2020 and 2021. Similarly, the price of home-building materials can increase drastically over a period of time. For example, framing lumber prices increased by 167 percent between August 2021 and August 2022.
Growing population in developed and developing economies is driving the market for modular construction. Other factors include less expensive construction and shorter building time. Increasing urbanization also contributes to the growth of this market. However, lack of skilled labor in developing countries is hindering growth. Nevertheless, a large number of new infrastructure projects will increase demand for modular construction.
Government initiatives are also driving the modular construction industry. In Singapore, for example, the government has mandated prefabricated, pre-finished, and volumetric construction and provides subsidies to participating companies. This initiative aims to standardize modern construction techniques. In China, Shenzhen recently announced a project to expand the campus of three local schools by August 2021, with an estimated investment of CNY 1100 million. The project will involve building 194,000 square meters of steel structures.
The report provides a thorough analysis of the global Construction Materials market. It analyzes the competitive scenario and the factors driving or hindering the market growth. In addition, it highlights new technologies and advancements. The Construction Materials market report also includes a country-level analysis. Moreover, the report provides an in-depth analysis of the key segments.
Although the construction industry has experienced steady growth in the past few years, it is still facing a serious labor shortage. According to Deloitte, the number of job openings in construction was up 50% since 2014. However, the number of new hires was down by only 4%, indicating a severe labor shortage. This creates significant risks for construction firms.
Green building materials
The growing demand for sustainable and low-emission buildings is driving the green building materials market. These buildings also cut operational costs and energy usage. However, there are numerous barriers in the market. In addition, the market is not yet highly consolidated. Major companies involved in the green building materials business are focusing on product development and strategic alliances.
Rising health concerns and the need for energy efficiency have fueled the demand for green building materials. As a result, the demand for green materials will continue to increase. In addition to fighting climate change, green buildings are also reducing carbon dioxide emissions, which improves health.
The latest COVID-19 trends in the construction materials market are the rise of globalisation and supply chain disruptions. The global construction industry is worth over USD 11 trillion, and residential construction is the largest sector. However, there have been some issues with the construction industry’s supply chain, particularly in China. The virus has grown from a China-centric problem to a global pandemic, and has had an increased impact on global construction supply chains.
Contractors are likely to be more selective in choosing the projects they bid on and choosing their partners. At the same time, the allocation of risk between stakeholders is being re-evaluated. The recent pandemic has highlighted the risks of the traditional “pass-the-parcel” approach, which involves passing risks from client to designer, with the result that smaller companies are often exposed to disproportionate risk.