How the Cost of Raw Materials Impacts Home Renovation

We live in a material world, and if you’re in the construction and home renovation industry, that reality hits hard. Every successful project begins with quality materials, but fluctuating costs and several factors significantly affect budgets and timelines.

With global events, supply chain issues, and shifting demand constantly in play, the total cost of raw materials has become more volatile than ever. Understanding market dynamics is a major competitive advantage for anyone working in the industry or considering a career in it.

So, how exactly does building material prices affect the home renovation sector? Let’s break down factors, real-world impact, and practical strategies to keep you ahead of the curve.

What Are Raw Materials and Why Do They Matter?

Raw materials refer to the basic components used to create buildings: everything from lumber and gravel to steel and concrete. The availability and cost of raw materials dictate every aspect of construction and renovation projects, including the:

total construction cost
financial feasibility of the project
project schedules and completion dates
durability and finish quality
final pricing for clients and homeowners
profit margins (for tradespersons and contractors)

Most construction begins with a detailed budget and timelines. But when building material prices change suddenly—say, the cost of lumber spikes halfway through framing—it can throw the entire project off track. You're then stuck deciding whether to delay the build, rework the budget, or rethink your material choices.

Here’s an example:

Let’s say you’re converting a 500 sq ft unfinished basement into a livable space for rent. You’ll need materials like lumber, drywall, insulation for energy efficiency, and electrical systems.

If the cost of lumber in Canada rises, you’ll likely need to take out bigger construction loans or force trade-offs elsewhere (e.g., cheaper flooring or lighting).

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Skilled Trades College of Canada students building a new house

Cost of Raw Materials in Ontario

In Canada, the material cost to build a custom-built home is constantly shifting, and so is the cost of home renovation projects. Here’s the kicker: prices don’t just change year over year—they move month to month. Low prices today can cost significantly more next month.

The Raw Materials Price Index dropped 1% in March 2025 due to lower energy and agricultural prices. However, since that dip came after several months of steady increases, the cost of raw materials is still up 3.9% compared to last year. Right now, market prices for key construction materials like metal, lumber, and concrete still feel the effects of previous surges.

As a result, the cost of construction in Ontario, especially in urban areas and major cities like Toronto, is also higher. Today, building a house in Ontario costs $320 to $550 per square foot (for a single-family home). That was only around $250 in 2023.

On the other hand, prices in rural areas like Northern Ontario and the surrounding area sit at around $250 to $450 per square foot for the average size in 2025.

Here’s a closer look at the prices of raw materials in Canada:

Raw Materials	Average Price (May 2025)
Cost of Raw Materials
Softwood Lumber (2x4 Eastern spruce-pine-fir)	$650 per 1,000 board feet
Structural Panel	$400 to $600 per 1,000 square feet
Crushed Stone or Gravel	$10 to $50 per ton
Concrete	$120 to $150 per cubic yard
Steel Rebar	$0.18 to $6.80 per foot
Bricks	$0.35 to $0.90 per brick
Hardwood Flooring	$9 to $25 per square foot
Plumbing Pipes	$0.40 to $8 per linear foot
Light Fixtures	$25 to $120 (Fluorescent Lights)

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Why Do Building Material Prices Fluctuate?

Building material prices rise and fall for all kinds of reasons—some local, some global. Here are a few of the big factors:

Supply and demand
Natural disasters
Fuel prices
Global markets
Government tariffs and policies

Case Study: The Great Lumber Crisis of 2021

As an unexpected side effect of the pandemic, lumber prices soared to record highs in 2021, more than tripling in some regions. Mill shutdowns, increased demand from DIYers, and supply chain bottlenecks created the perfect storm which led to massive cost overruns, delayed builds, and project cancellations.

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Skilled worker installing a new countertop for kitchen renovations

Image Source: Shutterstock

Strategies for Trades Professionals

As we’ve established, the cost of raw materials significantly impacts all aspects of construction. Whether you’re building a dream home or renovating an existing home, unexpected costs shouldn’t come as a surprise. This has been true since the dawn of time, so tradespersons and construction business owners have learned to adapt.

Here are some of the most effective strategies to help you manage fluctuating home renovation cost and material prices:

Update quotes frequently to reflect current market prices.
Secure materials early and purchase in bulk to lock in current prices.
Negotiate long-term contracts and discounts with trusted suppliers.
Build price flexibility into your agreements and contracts (i.e. escalation clauses, material allowances)
Offer multiple quotes to clients to provide options based on material selections.
Monitor the cost of raw materials trends to stay informed.
Become a material expert or collaborate with architects and engineers to find cost-effective alternatives for expensive materials.
Advise many homeowners to plan for higher costs and unexpected price changes, including material price fluctuations and unforeseen structural issues so they can effectively plan their budget.

Build Skills That Can Weather Any Market

The cost of raw materials fluctuates, but solid training never goes out of style. Getting into the construction and home renovation industry means more than learning to build custom homes or remodel a wine cellar. It’s also about navigating price spikes, supply shortages, and job site curveballs.

At Skilled Trades College of Canada, we prepare students for the real world of construction. Our 12-week Intro to Home Renovation Program is designed to help you learn essential skills in framing, drywall, electrical, plumbing, tile setting, and more, while giving you hands-on experience building a full 1,000 sq. ft. house.

Train alongside instructors who’ve worked through industry ups and downs—and learn how to adapt, stay efficient, and keep your projects on track, no matter the market. Enroll now!