Verisk Industry Trends for 4th Quarter 2018
Xactware's Pricing Data
This bulletin gives a brief overview of recent pricing trends in the property insurance, construction, and restoration industries.
As a reporter of market-specific pricing information for repairing or rebuilding structures and replacing personal property, Xactware conducts hundreds of thousands of industry surveys, and reviews more than 100 million data points per year submitted through field estimates written by contractors and adjusters as well as electronic data feeds provided by retail merchants. This extensive library of research enables Xactware to provide a comprehensive report of important industry trends.
Pricing News — 2018 - 4th Quarter
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 third quarter of 2018, Xactware observed cost increases to several material categories. The most significant quarterly change occurred in drywall material costs which increased 1.81 percent over the quarter and 5.04 percent since October 2017. The most significant annual change occurred in lumber material costs which decreased 1.52 percent over the quarter and increased 9.49 percent since October 2017.
The Material Composite Index report tracks a combination of several commonly used material components, including floor covering, paint, and roofing among others. The index showed a 1.09 percent cost increase in the third quarter of 2018 and a 4.28 percent cost increase since October 2017.
Labor
Xactware's Pricing Data Services also surveys thousands of contractors across the country each month to determine what they charge for labor. The most significant change we observed occurred in the labor cost of a drywall installer/finisher, which increased 9.5 percent since October 2017 and 2.65 percent over the last quarter.
The Retail Labor Index report tracks a combination of several common trades, including floor covering, painting, and roofing among others. In the third quarter of 2018, the index showed a 1.09 percent cost increase. Between October 2017 and October 2018, the index showed a 4 percent cost increase.
Combined Trends
The combined labor 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 labor and materials makes up the majority of Xactware price list items. Tracking the percent change for the cost of these items provides a good gauge of the general market.
The Combined Labor and Materials report showed a cost increase of 0.93 percent in the third quarter of 2018 and a 3.58 percent increase since October 2017.
Fuel Costs
Fuel costs are extremely volatile and are a factor in item pricing. High oil prices can push up the price of some raw materials. Since October 2017, fuel prices increased 11.73 percent and they rose 1.16 percent over the third quarter of 2018.
Xactware's Pricing Data Services carefully tracks fuel costs to ensure accurate pricing.
Hurricane Florence
Hurricane Florence was a powerful CAT 4 hurricane that caused severe damage in the Carolinas in September. According toInsurance Journal, “Florence will create more than US$10 billion in economic losses, although insured losses are expected to be in the low-digit billions due to low flood insurance penetration”
Xactware closely monitors pricing changes after any disaster. We did not see significant labor cost increases in South Carolina. However, three price list areas in North Carolina—Wilmington, Kinston, Fayetteville—saw price increases to labor trades. On average in those three price list areas, the cost of a Drywall Installer/Finisher increased 13.98 percent. While this is significant, it is not as large an increase as we have seen in other areas during similar disasters. After Hurricane Irma, Florida saw a 15.47 percent increase for the cost of a Drywall Installer/Finisher.
When we examined the Retail Labor Rate, we found that North Carolina, excluding the three areas with the largest damage, experienced a 1.1 percent increase from September to October. This is slightly higher than the quarterly national average of 1.09 percent. When we examine Fayetteville, Kinston, and Wilmington, we find significantly higher rates of change with Wilmington the highest with an increase of 5.3 percent.
These price increases are not unexpected after the demand surge created after a hurricane. When we examined the assignments filed through XactAnalysis, we found that the total number of assignments filed in the most affected areas increased 4,037 percent from August to September; the rest of North Carolina only increased 73.9 percent.
Where to Learn More
Annual Property Report
Xactware publishes annual property reports that focus on key trends during the previous calendar year. To order Xactware's Property Report for the United States or Canada, 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 labor 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 the United States and will vary from local prices.