New report suggests the U.S. construction industry has shown
resilience amidst global conflicts leading to stabilized construction costs.
NATIONAL REPORT - Despite widespread economic volatility, total construction
cost growth for the first half of 2024 ended up lower than expected due to
material costs trending at the low end of JLL’s forecast and a willingness to
compress margins. These combined influences kept total costs down and allowed
for higher-than-anticipated construction spending, prompting a modest upward
revision in spending projections for 2024, according to JLL’s 2024 Midyear
Construction Update and Reforecast.
However, labor challenges exerted upward pressure on costs
and continue unabated, the report stated. This dynamic will likely continue
into 2025 and beyond, influencing JLL’s predictions for the foreseeable future
and directing its attention to an increasingly local view.
JLL’s revised forecasts for 2024 point to a more modest
increase in total costs, just 1% to 2% (compared to 2%-4% at the start of the
year) in the U.S. and 3% to 6% in Canada, and an increase in construction
spending. More specifically, JLL forecast +2% to +6% in material costs in the
U.S. and +3% to 5% in Canada; +3% to 5% for wages in the U.S. and +4% to 6% in
Canada.
All other predictions, including wages and building activity
change, remain consistent with JLL’s original 2024 forecasts, continuing the
trends observed in 2023.
JLL also noted that aggregate materials are on the low end
of increases and volatility may be observed at a subcategory level. Further,
anticipating spending increases, and the price floor set by this demand, depend
upon continued public investment in infrastructure and other construction
projects. Should changes in legal doctrine prove more, and more immediately,
disruptive than anticipated to direct public spending and induced private
spending, downward revisions may be necessary.