Hurricane price warning

Hurricane price warning
Published: 26 December 2005

Hurricane price warning

The hurricanes that battered the Gulf Coast and Florida this year devastated communities and left tens of thousands of people homeless. Now consumers everywhere are likely to feel the impact of the storms in the form of rising prices for construction and building materials.Many of those materials already were going up in price, but within six months, prices might be much worse.

Tack US$7000 onto the cost of building a typical house in 2006, says Michael Carliner, an economist at the National Association of Home Builders. Because materials account for about a third of the cost of a new home, the increase "will have to be absorbed somewhere, most likely by consumers," he said.

"Prices are creeping up on all fronts," said Paul Winans, president of Winans Construction, a contractor in Oakland, California, which has added 15 per cent to its bids during the past year to reflect a sharp increase in wholesale prices for materials.

Because of continuing production and delivery difficulties, cement and concrete prices are likely to surge 10 per cent to 15 per cent in 2006, on top of a 10 per cent to 13 per cent increase from October 2004 to the same time in October 2005, Simonson said.

And all this is before rebuilding in the Gulf region gets under way. When that happens building demand will soar. That is assuming it happens. If it does, initial estimates suggest that rebuilding New Orleans alone would require at least 3.86Mt of cement over five years, according to the US Portland Cement Association.