Rise in material prices 'not good news' for construction firms-ABC

Dive Brief:

Construction material prices rose 0.3% between August and September, and they are 0.1% higher than September 2015, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data released Friday.

September marked the first month since November 2014 that nonresidential construction input prices were up on a year-over-year basis.

Four of 11 input prices dipped between August and September: prepared asphalt and tar roofing and siding products; iron and steel; steel mill products; and softwood lumber. The remaining seven material prices rose last month.

Dive Insight:

ABC Chief Economist Anirban Basu said the month-to-month and year-over-year rise in prices "is not good news for U.S. nonresidential construction firms." He attributed the rebound in prices to stabilized energy prices and what he considers wage inflation in the U.S.

In additional bad news for construction firms, Basu said contractor margins are tightening as rising labor and material costs leave firms struggling to make a profit. Prior to the Great Recession, contractors could transfer higher material costs to owners and clients, but "purchasers of construction services are now much less likely to accept significant cost inflation," he said in a release.

The skilled labor shortage is an ongoing concern for the construction industry, as employers continue to struggle to find qualified workers and meet demand. A nationwide survey of 1,459 contractors — conducted by the Associated General Contractors of America during July and August — found that 69% are having difficulty finding workers to fill hourly craft positions. To combat the problem, 48% of surveyed companies said they have increased pay for hourly craft workers — echoing reports of rising labor costs.

On a positive note, Basu predicted that despite the potential for a steady climb, material prices won't see a major surge in the coming months due to the strengthening U.S. dollar.

Friday's materials price data coincides with a recent report from the ABC that found its Construction Confidence Index for the first half of 2016 fell slightly from the second half of 2015. Negative factors including the labor shortage and rising material prices were cited as contributing to the dip in confidence.

wood and stainless steel continue to lead top kitchen design trends-NAHB Granite

NAHB: Granite, wood and stainless steel continue to lead top kitchen design trends

Dive Brief:

What's old is new again, according to a National Association of Home Builders report combining findings from its 2016 Builder Practices Survey and a recent Houzz study, both of which identify current trends in new single-family kitchens. 

Granite countertops (64%), wood cabinets (85%) and stainless steel (79%) appliances are still hot, according to NAHB data. Range-cooktops (97%), dishwashers (92%), microwave ovens (84%), garbage disposals (84%) and refrigerator-freezers (65%) are the most commonly provided appliances.

Among the least popular kitchen choices were solid-surface (9%) and engineered-stone (9%) countertops, laminate cabinetry (5%), multicolored cabinets (6%) and white appliances (4%). Elevators (2%), trash compactors (4%), standby generators (8%), hot water dispensers (8%) and water softeners (13%) were the least likely features to be included in new homes.

Home builders are sticking with old favorites like granite and stainless steel when designing kitchens with value-added features. However, homeowner tastes might be changing. A report last month from Zillow found that monochromatic cabinets were waning in popularity and that tuxedo cabinet — those painted in complimentary colors — were on the rise. The real estate website confirmed that homeowners prefer stainless steel appliances but that they are increasingly covering them up to move away from the industrial look. In a turnaround from what home builders seem to be banking on, Zillow also found that homeowners were growing tired of granite and increasingly opting for quartz, marble and butcher block counter tops.

Kitchens are the gathering place in most homes. Accordingly, a July report from the Harvard Joint Center for Housing Studies found that kitchen and bath remodels are the most common improvements that homeowners make. CNBC said that kitchen-related and other remodel types were so popular these days that they threaten to exceed new construction in the next year. In fact, by mid-2017, spending on home remodels and renovations should reach $321 billion, according to the HJCHS. One of the drivers behind this burst of remodeling activity is an increase in home equity. Gains have put 38 million homeowners in a 20% equity position, which makes financing these sorts of improvements easier, CNBC reports.

In its annual Cost vs. Value Index, Remodeling magazine reports that the average return on the cost of a remodeling project in 2015 was 64.4% if the home is sold within a year, compared to 62% a year earlier and the second-highest reported return since the recession. A general kitchen remodel in which features are upgraded but the plan isn't overhauled was among the project types reporting an increase in return value in 2015.