Material Price Volatility, What Pros Should Expect This Year
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Introduction
If you’re a contractor, one of the biggest challenges you face every year is material price volatility. In 2025, the situation looks no different. Prices for lumber, steel, copper, and other common construction materials are expected to fluctuate significantly due to a variety of global and domestic factors.
But how do you navigate these price changes? How do you forecast material costs for your clients, and how can you protect your margins while still staying competitive?
In this guide, we’ll break down the material price volatility that professionals should expect in 2025, including:
- The factors driving price changes this year
- The materials most likely to see price hikes
- How contractors can stay ahead of material costs
- Practical tips for navigating pricing volatility
Let’s dive in and prepare for the material pricing landscape in 2025.
📉 Why Material Prices Are So Volatile
Material price volatility is not a new issue in the construction world, but the causes behind it can vary year to year. In 2025, expect the following factors to influence material costs:
1. Supply Chain Disruptions
The pandemic had a lasting impact on supply chains, and while the worst of it may be over, disruptions continue to affect global material availability. Shortages in key materials like lumber, steel, and copper can cause spikes in prices when demand exceeds supply.
2. Inflationary Pressures
Inflation in many countries, especially the U.S., is causing the price of goods and services—including construction materials—to rise. With the costs of energy, labor, and logistics climbing, materials like drywall, insulation, and metals are expected to see price increases.
3. Global Economic Factors
Ongoing trade tensions, tariffs, and political instability in certain regions can affect the price of imported goods. For example, steel prices are often influenced by tariffs on imports from countries like China, and lumber prices can fluctuate based on policy changes related to forest management and exports.
4. Demand Surges
Construction booms, whether it’s for housing, commercial buildings, or infrastructure projects, drive demand for certain materials. Increased demand for housing and renovation projects, combined with delays in material production, will likely cause material costs to rise in the short term.
🏗️ Materials Expected to See the Most Price Volatility in 2025
Based on current market trends and projections for 2025, here’s a look at the materials most likely to see significant price fluctuations:
1. Lumber
Lumber prices have been highly volatile in recent years, peaking during the pandemic and then dropping. In 2025, the demand for residential housing is expected to continue, putting pressure on the lumber supply chain. Increased demand for new builds and renovations could lead to price increases for both softwood (used in framing) and hardwood (used in finishes).
- Estimated price fluctuations: Expect moderate price increases of 5-10% this year, with the potential for spikes in certain regions.
2. Steel
Steel is used in everything from structural frames to rebar and sheet metal. However, steel prices are affected by global trade and production capacity. As construction activity ramps up in 2025, steel demand will increase, especially in infrastructure projects, but the supply chain may struggle to keep pace.
- Estimated price fluctuations: Steel prices could increase by 5-15%, depending on international trade policies and global demand.
3. Copper
Copper is a critical material for electrical systems, plumbing, and roofing. While prices surged during the pandemic, they have stabilized somewhat, though they remain volatile. The global demand for copper, especially from emerging markets, continues to put pressure on prices.
- Estimated price fluctuations: Copper prices could rise by 3-7% as demand increases and mining operations face challenges.
4. Drywall
Drywall is a key material for almost every building project. While drywall prices haven’t been as volatile as materials like lumber or steel, production slowdowns and increased energy costs have started to push prices higher.
- Estimated price fluctuations: Drywall prices are expected to see 5-10% increases due to higher manufacturing and energy costs.
5. Concrete
Concrete is the backbone of most construction projects, from roads to foundations. The cost of concrete is influenced by the price of cement, aggregates, and transportation. Supply chain disruptions and high demand for infrastructure projects are likely to affect concrete prices.
- Estimated price fluctuations: Expect moderate price increases of 4-8% due to ongoing supply chain issues and rising energy costs.
🔨 How Contractors Can Stay Ahead of Material Price Fluctuations
1. Build Material Flexibility into Your Estimates
When creating estimates for your clients, don’t lock in material prices too early, especially for items that are likely to fluctuate. Instead, build a buffer or range into your estimates to account for future price changes.
- Tip: Use contingency fees in your estimates for materials that are likely to fluctuate, so clients are aware that prices could vary based on market conditions.
2. Negotiate Bulk Pricing and Secure Materials Early
Locking in materials early can help mitigate price increases. Work with suppliers who offer bulk pricing and advance orders to secure the materials at a more stable rate. If you’re planning larger projects, buying in bulk can save both time and money.
- Tip: Build relationships with trusted suppliers to access discounts and early price guarantees for materials that are in high demand.
3. Stay Informed on Market Trends
Given the unpredictability of material prices, staying informed about market trends is crucial. Regularly check material pricing reports, attend industry trade shows, and use tools like Estimero to track real-time pricing trends.
- Tip: Leverage technology, such as Estimero's price tracking tools, to keep your estimates accurate and up-to-date. This can help you track material prices and adjust your proposals quickly.
4. Consider Alternative Materials
In response to price fluctuations, consider offering alternative materials that may be more affordable but still meet your client’s needs. For example, engineered wood products can sometimes be more cost-effective than traditional hardwoods, and composite decking can replace expensive timber.
- Tip: Be upfront with clients about the benefits and trade-offs of different materials, helping them make informed decisions.
5. Adjust Project Timelines for Price Stability
Timing can make a big difference in pricing. If you can delay material purchases until prices stabilize, it could save both you and your clients money. However, be mindful of project deadlines and communicate with clients about any potential delays.
- Tip: Use your project timeline as a way to balance pricing and efficiency. If material costs are likely to rise in the near future, consider accelerating purchases or adjusting the schedule accordingly.
📊 Navigating Material Price Volatility: Real-World Example
Scenario:
A contractor, Sarah, is working on a mid-sized home renovation project and is concerned about fluctuating material prices. In particular, she’s worried about lumber and steel, which are critical to the project’s structure.
- Sarah’s approach:
- She secured a lumber order early at a stable price, locking in a 5% discount for bulk purchases.
- She adjusted her estimate to include a 10% contingency for rising steel prices, knowing it’s a volatile material.
- Sarah also communicated with her client about potential price increases, explaining that her estimate reflects the current market conditions.
- She was able to purchase steel at the best price when it dipped mid-project, ultimately saving $2,000 for her client.
Outcome:
By staying ahead of market trends, Sarah was able to protect her profit margins and provide her client with transparent pricing—which helped her close the deal and build a strong reputation for reliability.
FAQs: Material Price Volatility in 2025
Q: How can I factor in material price volatility for my clients?
A: You can factor in material price fluctuations by building contingency costs into your estimates and regularly updating material prices. Make sure to communicate potential price changes clearly to your clients.
Q: Are there specific materials I should be more concerned about in 2025?
A: Materials like lumber, steel, copper, and concrete are likely to experience the most volatility. Stay informed about global market conditions, trade policies, and industry trends.
Q: What’s the best way to handle price increases during ongoing projects?
A: If prices increase during an ongoing project, always document the price changes and discuss adjustments with your client. Offer solutions like substitute materials or adjust the timeline to mitigate the impact of price hikes.
Final Thoughts: Preparing for Material Price Volatility in 2025
Material price volatility is something every contractor has to manage, but with the right approach, you can minimize its impact on your business. Stay ahead of market trends, secure materials early, and be transparent with your clients.
With the right planning and flexibility, you’ll be able to navigate price fluctuations without compromising your profitability or your client relationships.
💡 Ready to stay ahead of material pricing? Try Estimero for real-time cost tracking and accurate estimates that help you manage price volatility.
Helpful Links:
- Estimero’s Material Cost Tracking
- How to Handle Price Fluctuations in Your Estimates
- Tips for Budgeting in Volatile Markets
Need help forecasting material costs?
Contact Estimero Support and we’ll help you adjust your estimates and manage pricing volatility like a pro!