Author: Brett Knox
February 18, 2025 - 7 MIN. READ
High prices and sluggish demand have affected contractor buying and become the norm for many contractors in the building trades. Since COVID, material costs have soared, and finding steady leads has only grown tougher.
What’s driving this shift? Today's market is shaped by high inflation, surging raw material demand, and ongoing shipping challenges.
But will 2025 bring relief or more turbulence? Let’s break down the key trends shaping contractor pricing, buying habits, and the supply chain.
Bad news for electricians, HVAC contractors, and plumbers: Material prices are likely to remain high.
2024 ended on a positive note with a slight price drop for some materials used in construction. However, this trend didn’t lower prices across the board, and product categories used by the building trades have remained high.
For instance, electrical contractors saw a 7.3% increase in switchgear and switchboard prices, and copper wires cost 9.5% more compared to a year ago! It’s easy to see how any job calling for these products can result in a small profit margin.
It's not an isolated phenomenon. In fact, 62% of HVAC manufacturers raised their prices in 2023 and 2024, partly due to new regulations regarding HVAC refrigerants.
It’s important to put these numbers in context. Price hikes aren't a recent trend: They've been happening since COVID-19 and are adding up.
Compared to pre-COVID prices, electrical contractors 41% more for copper wire, and 48% more for switchgear and switchboard.
A new 25% tariff will take effect on all steel and aluminum imports in March 2025. This decision affects all trade partners and is intended to protect domestic production.
This decision comes after the new administration announced a 10% tariff on imports from China, which supplies the world with a wide range of raw materials.
Plus, there have been discussions to impose tariffs on Mexico and Canada. While these punitive measures are on hold at the moment, new tariffs could be introduced in the future as a negotiation tactic.
What does it mean for contractors in the trades?
After a sharp increase following COVID-19, inflation peaked at 9.1% in 2022. For building trades contractors, this phenomenon contributes to the high material prices discussed above – while reducing customers’ buying power and making jobs harder to find.
Since then, inflation has steadily cooled off. However, this trend has turned around during the past few months.
Inflation was up in Q4 2024, and experts believe tariffs will contribute to a surge in inflation over the coming months. Consumers are already expressing low sentiment following the latest tariff announcements.
Tariffs aren’t the only factor to blame. In 2024, home prices rose by 4.8%, contributing to a phenomenon known as shelter inflation. As Americans spend more on basic needs like housing, other spending categories like electrical, plumbing, or HVAC upgrades aren’t a priority.
The Fed cut interest rates three times in a row from September to December 2024, reflecting a cooling inflation at the time.
At the moment, economists believe the Fed will wait until next quarter before cutting interest rates any further. Delaying further cuts is a response to new tariffs, likely increasing inflation.
The Fed interest rate is also a tool to stimulate the economy. Recent numbers show strong job creation and current interest rates are enough to support growth, so there is no incentive to cut them for now.
Stagnating interest rates mean two things for trades contractors:
Since 2023, the Red Sea Crisis has been impacting global supply chains. With 10 to 15% of global trade going through the Suez Canal, pirate attacks carried out by Houthi rebels in the Red Sea are driving shipping costs up and contributing to port congestion as vessels seek alternative routes.
In a recent development, the Houthi rebels have announced they will only target Israeli ships. Experts look at this ceasefire as a fragile situation and something to watch closely in 2025. For now, the area is still considered extremely risky, and sea traffic hasn't picked up yet.
The Red Sea Crisis is creating longer lead times for some products imported from China. Port congestion also contributes to delays and unpredictable lead times on the entire trades supply chain.
Lastly, high freight costs are impacting consumers, contributing to a reduction in their buying power and limited budgets for electrical, HVAC, and plumbing improvements.
Another key factor to watch in 2025 is the ongoing copper shortages. Demand is rising sharply due to growth in areas like the energy transition, data centers, and the automotive industry.
It’s growing at such a pace that copper mines might only be able to meet 80% of the global demand for the material by 2030.
With copper being a key raw material for wiring, electrical contractors have been feeling the pinch. New materials, like graphene-copper composites, might be a possible answer.
The ongoing copper shortage has also affected plumbers, making PEX pipes an appealing alternative to traditional copper products.
Several factors are coming together to potentially increase prices for many product categories in 2025. It doesn’t mean business growth is unattainable!
With a smarter contractor buying strategy in place, you can still secure discounts on key materials and manage your supply chain more effectively.
As a leading buying platform for trades, Raiven is here to help you navigate a market with price fluctuations.
Maximize your cost savings and simplify your procurement operations by joining a premier purchasing program like Raiven. With Raiven, businesses harness collective buying power to realize deep discounts, advantageous service terms, and priority access to critical supply chains. Eliminate the headache of vendor negotiations and enjoy significant reductions in expenses for EV charging stations, lighting, load shedding, tools, wire, panels, conduit, and more.
Gain access to pre-negotiated discounts of 7%-30% from industry-leading manufacturers and distributors, including Alpscontrols, ChargePoint, EnelX/Juicebox, Ferguson, Grainger, Graybar, HD Supply, Home Depot, Lowe’s, Office Depot, Sunbelt Rentals, Schneider Electric, and more!
Raiven supports electrical contractors by delivering unmatched prices on equipment, parts, and maintenance supplies. Our user-friendly purchasing platform ensures seamless and efficient procurement processes. Other key benefits:
Visit Raiven to learn more about how we can help you build a resilient business with a strong buying process.Summary: What’s on the horizon for 2025? Let’s take a closer look at the many factors affecting global supply chains and prices for materials used by contractors in the trades.