Shortage of building materials poses significant challenge for contractors

More contractors are facing a shortage of building materials as the pandemic continues, according to new fourth quarter data from the U.S. Chamber of Commerce Commercial Construction Index.

This quarter, 41 percent of contractors say less availability of building products and materials is a severe consequence of the pandemic, up from just 15 percent saying the same in Q3.

Most (71 percent) contractors say they face at least one material shortage, up 17 points from 54 percent in Q3. The most reported material shortage was found in wood/lumber, which has seen higher demand from a boom in residential construction during the pandemic. Now, 31 percent of commercial construction contractors report a shortage of lumber, up 20 points from 11 percent last quarter.

Of those contractors experiencing shortages, 89 percent say it is having a moderate to high level of impact on their business, up from 75 percent saying so last quarter.

Despite growing concern over materials shortages, the overall index score this quarter rose slightly to 60, up from 57 in Q3. All three of the index’s main indicators rose, with contractors’ confidence in new business opportunities over the next year inched up one point to 57, revenue expectations increased four points to 52, and backlog rose two points to 70. Despite the gains, the index remains significantly below the score of 74 from the first quarter of 2020 before the pandemic.

“The pandemic has exacerbated issues contractors were already facing in availability and cost of materials from tariffs and a shortage of skilled workers,” said U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “But there’s reason for optimism. More than one in three contractors plan to hire more workers in the next six months, and most see sufficient new business in the coming year.”

Bradley added, “The industry is a positive indicator of where the rest of the economy is going, but it’s likely confidence won’t fully return until companies and workers have the confidence to get back to work safely. That’s why the U.S. Chamber is urging lawmakers to come together before the end of the year on additional pandemic relief.”