Building activity drives rise in reconstruction costs, with lumber leading the way

April 27, 2021 / 2 min read

Verisk recently released its latest 360Value^® Quarterly Cost Updates, which offers an overview of current reconstruction cost trends at the national and state/provincial levels for the United States and Canada from April 2020 to April 2021.

U.S. reconstruction costs rise again

Total reconstruction costs, including materials and retail labor, rose 8.12% at the national level in the United States from April 2020 to April 2021. The period’s growth was slightly less heated than the 9.1% increase seen from January 2020 to January 2021. Lumber costs soared a historic 84.71%, three months after notching a 54% increase from January 2020 to January 2021.

Lower interest rates combined with a pandemic-fueled home-buying surge have contributed to increased building activity as homeowners spruce up their properties, leading to rising demand for materials and labor.

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Reconstruction costs increased in all states. Idaho, Hawaii, and New Mexico had the most significant increases at 11.93%, 11.06%, and 10.1%. California had the lowest change at 5.86%.

Materials costs were up 15.2% with rises in all categories, with lumber leading, followed by carpet at a distant second with a 7.63% increase. Hourly labor rates rose 3.8%, about half the growth of the prior period, with electrician costs up the most among the trades with a 3.93% jump.

Canada costs climb at a lower rate

In Canada, total costs increased 7.65% from April 2020 to April 2021, led by lumber costs. Just as in the United States, the most recent period’s growth slowed from January 2020 to January 2021, which notched a 7.9% increase. During the first quarter of 2021 (January through March), reconstruction costs grew 0.94%.

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All provinces experienced cost increases. Newfoundland and Quebec had the highest growth rates at 8.94% and 8.92%, respectively, while Saskatchewan had the lowest increase at 6.16%.

Lumber prices rose 69.51%, which was even greater than the increase of 42.7% from January 2020 to January 2021. Carpet prices were No. 2, with a 7.26% rise. Hourly labor rates rose 3.7% overall, with heating/air-conditioning mechanics seeing the biggest wage growth at 4.57%.

Read the full 360Value^® Quarterly Cost Updates.