Construction Sector Faces Volatility
Lumber supplier ProWood has released its first-ever State of the Industry Report, highlighting major shifts in construction. The analysis points to ongoing supply chain disruptions, persistent labor shortages, and an increased focus on sustainability as key challenges for the sector.
While material prices have seen some stabilization after recent volatility, they remain significantly higher than pre-pandemic levels. Lumber, for example, has largely returned to normal after a 300% price surge, but materials like ready-mix concrete and steel mill products remain elevated. The labor shortage remains a primary cause of project delays, with 92% of construction firms reporting difficulty finding qualified workers to hire. The industry needs to attract an estimated 439,000 new workers in 2025 just to meet demand, a challenge compounded by the fact that about one in five current construction workers is over the age of 55 and nearing retirement. The push for sustainability is driven by the industry's significant environmental footprint, as it accounts for approximately 37% of global carbon emissions and consumes nearly half of the world's natural resources. In response, there is a growing use of low-carbon materials like engineered timber and recycled steel, and an increasing expectation for buildings to meet green certification standards like LEED or BREEAM. To mitigate supply chain risks, construction firms are increasingly diversifying their sourcing strategies. This includes expanding their networks of both domestic and international vendors and exploring alternative materials less susceptible to global trade volatility. Despite these challenges, the overall outlook for construction starts is projected to see growth. However, the Associated Builders and Contractors' Construction Backlog Indicator fell to a four-year low in early 2026, suggesting intensifying competition for future projects, particularly among smaller firms.
