by Christine Mosholder
While the last several months have continued to keep us on our toes as an industry, the one question that keeps getting asked is, “When will construction return to normal?” Thankfully, the past few months seem to have provided an answer: sometime in 2022.
Both the spike in activity in 2021 and the drop in 2020 can be explained by COVID-19. Most projects that were canceled or postponed in 2020 due to the pandemic resumed construction in 2021 as the construction market stabilized. Furthermore, a combination of shelter-in-place orders and record low-interest rates created the ideal conditions for a boom in the residential sector. These two factors caused the market to be artificially subdued in 2020 and artificially elevated in 2021.
Moving into the new year, expect pre-pandemic trends to take over. Markets that were declining before the pandemic should begin to decline again, and growing markets are expected to continue their growth. COVID-19 still poses a risk, but thanks to vaccines and a deeper understanding of this virus, needed health safety changes to job sites can be made, keeping things moving forward.
Final construction employment figures have also been released for the last quarter and show a steady increase in the workforce. Some markets have added to their workforce, while in others employment remains well below pre-pandemic levels. This is generally due to some key markets lifting restrictions faster than others.
Commodity prices remain well above their 2019 levels, although they are beginning to relax. Most notably, the price of lumber jumped by almost 200% early in the year, briefly putting it in league with precious metals. The exact cause of these increases varies by commodity, and ranges from environmental regulations to speculative buying to a lack of shipping containers, but is generally due to a mix of increased demand and constrained supply. Eased restrictions mean that demand has recovered much faster than suppliers can produce. Many of these issues are likely to persist into the new year, but we expect pricing to stabilize in early 2022.
Overall, the outlook for next year continues to be positive. 2022 is unlikely to be as active as 2021, but a return to normal is expected. Old trends are likely to take over as pandemic-related projects wrap up, and this will make contractors less likely to be caught off guard by sudden changes in the market. However, the markets continue to change daily, making the timing of any project critical, at least for the next few months.
Christine Mosholder
Christine Mosholder is managing partner at Fort Point Project Management, a Cumming Group company.
