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Construction costs soar amid record inflation

As the nation continues to tackle inflation, a closer look at the impact on the construction industry that's driving up consumer costs.

COLUMBIA, S.C. — As a civil engineer, Mark Hood is no stranger to solving problems.

His company Hood Construction has been designing projects for more than 30 years.

"We're a commercial, custom builder," Hood said. "We work in the K-12 market. We work in the healthcare market."

But, record inflation, supply, and labor shortages are presenting a new challenge.

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"We're feeling the effects of the rise of the cost of material, but we're also feeling the effects of the cost of labor," Hood said, "and the availability of materials."

Across the country, building materials have increased over 20% from last year and at least 33% since the start of the pandemic, according to the National Association of Home Builders.

The organization adds that builders are doing what they can to avoid pricing consumers out of homes while maintaining competitive prices, but construction delays and supply costs have made the industry more volatile.

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Rising interest rates have been particularly challenging for residential builders, as the Federal Reserve works to curb inflation, in part, by curbing consumer demand.

"The housing market is the one that's impacted first and impacted most and we can see that very clearly through mortgage interest rates which have effectively doubled," Joseph Von Nessen, a University of South Carolina research economist, said.

The Federal Reserve has seen some progress as fewer people seek homes and major purchases due to high costs, which also impact builders.

"If you don't build rooftops," Hood said. "There's no reason for us to build schools. There's no reason for us to build hospitals."

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So, how should consumers respond?

"It's going to take a period of time to see any meaningful impact at the grocery store or at the gas station or elsewhere," Von Nessen said, "and so consumers need to be prepared to get creative and to think of other ways to save money."

If the Federal Reserve's efforts to cut inflation are successful, Von Nessen said prices could being to taper off in the months ahead, though he doesn't expect they will decline by much.

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