The Current State of the Construction Industry

For many, the year 2022 has been an excellent year in real estate and construction. At least, that is what buyers and sellers are saying. The industry is, too, with both residential and commercial construction requests at an all-time high. The prices reflect that. Still, the construction industry is struggling to meet that demand, with impacts from current supply chain issues, inflation, and a shortage in the labor market. The demands are real. Learn how the supply chain affects construction today.


Every economy is about supply and demand, and in real estate and construction, the demand is high right now. With that demand comes low interest rates. Today’s rates drive the requests for construction in both commercial and residential. Homes are selling for twice their value in some areas of the country, which is good for sellers, but not so much for buyers.

Renovating is not a different challenge than new construction. You still need the labor and the materials, both of which are commodities with a demand that is significant. The labor market impacts the supply chain, with construction seeing delays of weeks and months for materials or goods that typically would arrive in days.


Current supply chain issues are marked by significant delays caused by an increase in demand for products and labor. One element of construction may require multiple parts, each of which needs to be supplied by a different manufacturer or distributor. These supply chain issues drive up costs and extend the timelines for construction completion.

That has a trickle effect of creating costs for the buyers, which for them could be life-changing. It’s a trickle effect sweeping the nation. The end result is just the start of how the supply chain affects construction. In many areas, it is impossible to meet the demands in a timely and cost-effective manner.


Inflation is defined as a general increase in prices in the cost of goods or services overall in an economy. It’s not just one store or one construction company increasing prices because materials are in demand and shipping time is long. It happens to the economy. There are many theories as to whether or not inflation is good, and why it happens, and it will all depend on the perspective. Overall, inflation occurs when demand is high on goods and services overall.

One sector of the economy will have a trickle effect on the other. A spike in oil prices will impact the logistics and supply chain of the construction industry, as an example. There is an increase in demand for materials and labor in the construction industry, as a result of the increase in project requests. As a result, prices will increase across multiple sectors when prices in the construction industry increase, and this is all a result of inflation.

Invest in Research

The construction industry is adjusting to current supply chain issues to accommodate new home buyers and also new commercial builds. One common strategy is to hold prices for up to 90 days to keep the customer. When you understand how the supply chain affects construction, it’s easier to make the best decisions. Time spent investing in research is time well spent.