Building materials costs slide on weak demand in U.S.

Claude Solnik

Building material prices have been falling amid a decline in global and local demand, hurting firms that sell materials and tantalizing builders who could get better deals if only they had the work.

Edgar Goodale, president of Riverhead Building Supply, said the prices reflect fewer requests for products due to a construction slump.

"It's simple supply and demand," Goodale said. "There's too much capacity in the industry for the amount of housing being built nationwide. "

The price slide across most products comes after prices for labor and materials rose over the past two years.

"Two years ago construction costs skyrocketed," said Gregg Rechler, co-managing partner of Rechler Equity Partners. "Commodity costs skyrocketed. Now demand is considerably lower. Prices have leveled off from the highs of 2007 and even 2006 and gotten back to the 2005 level. "

Builders said prices for materials fell 25 to 50 percent in the past 18 months, except for oil-based products, which are holding strong.

Petroleum-based asphalt shingles over the past 18 months shot up from about $18 to $28 as the price of oil rebounded, according to Goodale.

But two-by-four studs fell from $2.59 to $1.99 and 18-inch cedar singles dropped from $80 per bundle to $38.

Frank Perruzza, president of New Hyde Park-based Block By Block Builder said four-by-eight sheet rock fell from $12 a board last year to $10.

Lower demand for concrete and metal in China drove down prices for those commodities as well.

"Last year when China was building so much, the United States was selling it to China," Perruzza said. "We found a shortage. They [concrete suppliers] started charging us more. This year it went down. "

New ways of obtaining supplies such as online bidding also could drive prices down further. Various Web sites let suppliers bid for work through online auctions. And Fred Cann, owner of JR Solutions, a contractor in South Huntington, recently launched Bidformaterials.com, letting builders buy supplies from vendors who bid in an effort to offer the best prices.

"We have less time to spend shopping for materials," he said. "More and more managers are having to work themselves, which eliminates time in their day to perform these duties. "

Goodale is optimistic demand will bounce back before the winter lull, saying "the coming months look much better than the past months" and that "people seem to be dipping their toes in the water, signifying they may be starting to do something. "

But Cann sees the winter around the corner as bringing further price reductions. "Everything fluctuates by season," he said. "We're going into the winter months, so prices will come down more. "

Contractors are seeing another trend in terms of building materials as more residents seek to save by buying their own supplies, which sometimes causes problems.

Perruzza talked about one resident who insisted on buying a faucet online, which he said led to additional complications and costs.

"The plumber said, 'Where'd you buy this faucet?'" Perruzza said. "Online. That's your mistake. It's not made for New York. You have to upgrade it. "