Input prices have been on the rise since the start of the pandemic with supply chain shortages driving up demand, and now, inflation. In fact, the industry saw year-over-year increases for the last two years. While the rise in prices has been significant, we are beginning to see the pace start to slow.
In October, prices rose 0.3% overall from September. This increase is likely the result of petroleum, concrete, and plumbing prices, all of which are still high. Conversely, other inputs saw a sharp decline in price, including steel, iron, and lumber, a nice reprieve after the last few years.
The slowing pace in rising prices suggests that things may be on the mend. In fact, experts suggest that peak inflation is behind contractors and that prices will slowly begin the descent to normal. Recent PPI reports back such assumptions and point toward the Federal Reserve slowing interest rate increases soon.
While there is hope on the horizon, maintaining optimism can be difficult. Since pre-pandemic February 2020, the industry has experienced increases of up to 41%. While slowing inflation and lower interest rates are positive, ongoing supply chain shortages and unmet demand will continue to play a role in the price of inputs.
Many in the industry estimate continued increases in 2023 and a more likely return to normal starting in 2024. While some input prices are beginning to drop, others are still on the rise, and extended lead times are expected to contribute to oncoming price hikes.