Verisk Industry Trends for 2nd Quarter 2019

Materials

Material costs are highly variable and are sometimes impacted by factors such as fuel costs, changes to industry practices, or natural disasters. Xactware closely monitors a wide variety of material costs across the country to ensure its price lists reflect any recent changes to pricing.

In the first quarter of 2019, Xactware observed changes to several material categories. Drywall material costs had the largest per cent change: they increased 2.7 per cent since January and 4.09 per cent since April 2018. Lumber material costs were the only key category to show a decrease.

The Material Composite Index report tracks a combination of several commonly used material components, including floor covering, paint, and roofing. The index showed a 0.41 per cent increase in the first quarter of 2019 and a 2.81 per cent cost increase since April 2018.

Labour

Xactware’s Pricing Data Services also surveys thousands of contractors across the country each month to determine what they are charging for labour. The most significant change occurred in the labour cost of a brick or stone mason, which increased 0.85 per cent over the quarter and 5.47 per cent over the year.

The Retail Labour Index tracks a combination of several common trades, including floor covering, painting, and roofing. In the first quarter of 2019, the index showed a 0.72 per cent cost increase. Since April 2018, it showed a cost increase of 3.63 per cent.

Combined Trends

The Combined Labour and Materials report is based on monthly building cost data published by Xactware. It comprises a set of commonly used items and may be used as an indicator of trends within the marketplace. The combination of labour and materials makes up the majority of Xactware price list items. Tracking the per cent change for the cost of these items provides a good gauge of the general market.

The Combined Labour and Materials report showed a cost increase of 0.41 per cent in the first quarter of 2019 and a 2.39 per cent increase over the year.

Fuel Costs

Fuel costs are extremely volatile and are a factor in item pricing, since low oil prices can push down the price of some raw materials. Fuel prices increased 19.44 per cent over the first quarter of 2019 and decreased 2.89 per cent over the last year. Xactware’s Pricing Data Services carefully tracks fuel costs to ensure accurate pricing.

Lumber Material Costs

In September 2017, significant tariffs of about 20 per cent were placed on Canadian softwood entering the U.S. market. The U.S. claims there are “unfair subsidies” from the Canadian government because Canadian producers tend to harvest from Crown land—which typically charges lower stumpage fees than the market-determined ones charged by private landowners in the United States. Canada disputes this claim and has filed formal complaints with the World Trade Organization.

CBC reports that, despite the tariffs, business is booming for the larger Canadian softwood lumber producers—though small and medium producers are struggling to stay afloat. Susan Yurkovich, president of B.C. Lumber Trade Council, told CBC that a strong demand from the incredibly hot U.S. housing market means that they can pass the duties on the U.S. consumers. In fact, the U.S. based National Association of Home Builders reported in June 2018 that “rising lumber prices have added nearly $9,000 to the price of a typical new home and more than $3,000 to the price of a typical multifamily unit.”

The Xactware Industry Trend Report tracks the average cost of lumber materials. After the tariffs were enforced in 2017, there was a 10.4 per cent jump in lumber costs from the previous month. Prices continued to climb until August 2018; at that point, prices had increased 19.1 per cent since before the tariffs were imposed—lower than the 21 per cent increase seen in the United States.  Since then, lumber prices have decreased 3.8 per cent. However, they are still 14.6 per cent higher than they were in August 2017, before the tariffs.

Where to Learn More

Annual Property Report

Xactware publishes annual property reports that focus on key trends during the previous calendar year. To order a copy of Xactware’s Property Report for Canada or the United States, please visit the Xactware Online Store.

Industry Trend Reports

Using Industry Trend Reports, Xactware customers can examine pricing trends on national, state or province, and local levels for key material and labour pricing changes in multiple trades. Trends can be viewed by the month or over extended periods of time. For more information about Xactware’s Industry Trend Reports, or to receive access to them, please contact your sales representative or call 1-800-424-9228.

Pricing Methodology White Paper

For more information about Xactware’s methodology for researching and publishing pricing information, please see the Pricing Research Methodology white paper on the eService Center.

Unless otherwise stated, the values reported in this bulletin are national averages for Canada and will vary from local prices.