Mortgage Rates Up; Construction Materials Higher 1Q 2023

construction materials

There’s a story of a Dutch boy who saved his country by sticking his finger in a dam leak until the wall could be repaired. The analogy seems to fit what Americans are doing to deal with the first quarter 2023 economy. With higher mortgage rates and materials prices, the construction industry is trying to plug the holes in the economy dam to prevent devastating damage.

We will breathe easier when the economy is repaired.

Interest rates have a strong influence on construction builds. The 30-year fixed-rate mortgage was 7.03% March 1, 2023. The unpredictable up-and-down interest rates are “confounding construction,” says one journalist during an interview with ABC’s chief economist, Anirban Basu.

Traditionally, higher interest rates have a negative impact on the construction industry, said Basu. “Higher interest rates have completely frozen the owner-occupied residential construction market,” he said. “Mortgage applications have fallen to their lowest level since 1997. As a result, new authorizations for single-family units are down 17.3% year over year.”

Construction Dive’s producer price index shows the differences are gradual when viewed as one-month percentage changes. But the increases since 2020 are impressive. AGC’s chief economist Ken Simonson says contractors are right to rank construction materials costs as a major concern for 2023:

  • Materials/commoditiesincreases since 2020
    • 219.4% Natural gas
    • 100.1% Unprocessed energy materials
    • 64.6% Steel mill products
    • 56.6% Hot rolled steel bars, plates/structural shapes
    • 55.9% Iron/steel
    • 52.5% Fabricated structural metal products
    • 50.0% Domestic crude petroleum
    • 42.7% Gypsum products
    • 35.5% Insulation materials
    • 33.5% Switch gear, switchboard, industrial controls equipment
    • 33.4% Prepared asphalt, tar roofing, siding products
    • 33.0% Copper wire/cable (1-year change – ↓2.06%*)
    • 31.3% Adhesives/sealants
    • 28.7% Lumber/wood products (1-year change – ↓62.9%*)
    • 27.9% Concrete products
    • 25.5% Brick/structural clay tile
    • 23.9% Construction machinery/equipment
    • 17.5% Plumbing fixtures/fittings
    • 17.0% Softwood lumber
  • Constructionindustry input price increases since 2020 – ↑37.37%
    • 38.2% Commercial
    • 38.0% Healthcare
    • 37.9% Other nonresidential
    • 37.9% Nonresidential
    • 36.8% Maintenance, repair/renovation
    • 35.7% Multifamily
    • 32.7% Industrial

Find out what your competition (materials suppliers, construction general or subcontractors, building or design professionals) uses to build business. To learn more about how you can use our building permit analytics, contact a Construction Monitor marketing professional.


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