Construction starts trending upward after mid-year decline
- Year-end statewide construction starts in key sectors are $222 million below 2019 totals. Pre-development indicators appear favorable while the construction workforce exceeds pre-COVID 19 levels. New construction activity began trending upward during the fourth quarter of 2020 after a mid-year decline.
- A decrease in construction starts has led to increased contractor participation and competitiveness. The ability to continue to recognize cost reductions will diminish in 2021 as material pricing remains volatile, material costs are set to escalate, and construction starts increase.
- LCK Construction Tip: The construction market is continuing to feel the medium and long-term implications from the COVID-19 pandemic. As a new normal evolves, owners procuring construction should thoroughly vet prospective contractors before entering into an agreement.
Construction Starts: During 2020, statewide construction starts decreased in four of six sectors as compared to 2019. The two increasing sectors, multifamily and manufacturing, showed a start growth of 42% and 35% respectively for a combined $913 million in new construction projects. Commercial construction starts increased significantly during the fourth quarter of 2020, as compared to the preceding three quarters.
Construction Workforce: According to the Bureau of Labor Statistics, as of December 2020, there were 115,000 construction employees in South Carolina, 5,800 more than December 2019. Statewide the construction workforce declined by 6% in April, recouped job losses by September, and now exceeds pre-COVID 19 employment by +/- 5,000 workers.
U.S. Material Pricing: A year of pricing stability ended in March 2020 when volatility re-entered the market. Product shortages and price increases for various materials were realized in the spring, while pricing for other materials declined due to decreased demand. The third and fourth quarters of 2020 saw minor upward price movement with average quarterly increases across all materials tallying 2.39% and 1.66%. Diesel fuel, pre-engineered metal buildings, steel products, and precast concrete drove fourth quarter increases. Lumber pricing remains wildly volatile and steel pricing is expected to continue increasing into 2021.
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