The construction industry faced a number of challenges in 2024; major players grappled with the complexities of economic pressures and headwinds, interest rate hikes (prior to the Fed’s rate cut), cash flow and operational challenges and equipment-related challenges.

“Although election years often create temporary hesitations around large equipment purchases, I remain optimistic,” Tom Reilly, construction equipment financing president at 1st Source Bank, says. “Recent infrastructure bills have pumped significant work into the marketplace, driving sustained demand for equipment. Contractors need to act quickly to secure the right tools for these projects.”

A Sandhills Global report focused on construction equipment for the month of September revealed that inventory levels are trending upward on a year-over-year basis. Inventory levels of used heavy-duty construction equipment (including crawler excavators, dozers and wheel loaders) were up 21.5% year over year while used medium-duty construction equipment (including skid steers, loader backhoes and mini excavators) were up 36.3% year over year and used lifts were up 21.5% year over year.

The same Sandhills report noted an ongoing trend of declining asking and auction values for construction equipment. On a year-over-year basis, asking values were down 4.4% for used heavy-duty construction, down 6.23% for medium-duty and down 8.15% for used lifts.

Inflation has hit the construction market particularly hard; a Suite by Monitor report revealed labor costs have significantly increased since 2020, and Secured Research reported a dramatic surge in raw material costs, including steel, lumber and cement.

Reilly points out that interest rates, fixed-rate loans and sustainability are all key focus areas for the bank. Of interest rates, Rielly says, “Many contractors financed equipment at higher rates over the past year, and as rates potentially decrease, we anticipate refinancing requests.”

Cost predictability is paramount in the construction market. “Contractors need to lock in monthly payments to accurately budget for projects. Fixed-rate loans reduce the risk of cost overruns and give our clients the confidence to bid competitively,” Reilly says.

Additional analysis from Secured Research suggests a trend of buying equipment online, noting that more than 75% of surveyed construction companies reported purchase of equipment online within the past 12 months, up from just 45% pre-pandemic, in 2019.

Suite by Monitor’s construction report suggests success in the construction market will require the ability to adapt quickly, make informed decisions and find a successful balance of the economic climate’s demands with the need for operational efficiency and technological advancement.

“In today’s construction market, uncertainty is the norm, and contractors need more than just financing — they need a partner who understands the challenges ahead,” Reilly says. •