Construction firms should stockpile a supply of critical materials like lumber and steel they'll need for projects in the second half of the year, as experts predict shortages will continue to plague the building industry. 

Materials shortages have hamstrung builders over the course of the pandemic, leading to unprecedented price spikes and long lead times for key construction components. The latest Bureau of Labor Statistics figures show that lumber prices grew 86% year over year in April 2021, while prices for steel products increased 67%. The highest year-over-year increase previously for either material was 20%. "Material cost growth is expected to outpace all other elements of construction cost increases this year," says Henry D'Esposito, JLL's senior research analyst, Construction, in a new post. "Some developers who were already taking a wait-and-see approach to projects during the pandemic are hesitant to jump back in for fear of buying at the top of the market."

Most of the steel and lumber used in the US is produced domestically, and pandemic-related shutdowns led to a major hiccup in supply chains. But many expected demand would go down due to a pandemic-fueled recession, D'Esposito says, and for a while, it did—steel producers idled roughly one third of their capacity. But that slowdown was followed by an economic recovery that "caught the supply side by surprise."