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.
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 2020, Xactware observed changes to six key material categories. Lumber material costs sharply increased 56.81 percent over the quarter and 59.69 percent since October 2019.
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 10.46 percent cost increase in the third quarter of 2020 and 14.54 percent cost increase since October 2019.
Xactware’s Pricing Data Services team also surveys thousands of contractors across the country each month to determine what they charge for labor. While labor cost of a drywall installer had the highest annual percent change with a 13.78 percent increase, the labor cost of a brick or stone mason had the highest quarterly percent change with a 4.18 increase.
The Retail Labor Index report tracks a combination of several common trades, including floor covering, painting, and roofing. In the third quarter of 2020, the index showed a 2.02 percent cost increase. Between October 2019 and October 2020, the index showed a 7.3 percent cost increase.
However, the individual trades that contribute to the Retail Labor Index varied in their percent change over the quarter. The most significant quarterly change occurred in the labor cost of a plasterer which increased 9.09 percent since July.
The combined labor and material 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 5.41 percent in the third quarter of 2020 and a 9.08 percent increase since October 2019.
Fuel costs are extremely volatile and are a factor in item pricing. Low oil prices can push down the price of some raw materials. During the third quarter of 2020, fuel costs have decreased 0.23 percent, and have also decreased by 17.9 percent since October 2019. Xactware’s Pricing Data Services carefully tracks fuel costs to ensure accurate pricing.
Since October 2019, lumber prices have dramatically increased by 59.69 percent in the United States. During that time, several factors have contributed to a shortage in supply of common lumber materials, including Covid-19 and its associated restrictions, as well as an increase in building activity (including DIY builders) which didn’t slow down much since the beginning of the current pandemic. With this shortage of supply, prices for certain common lumber materials have rapidly increased. For example, sheathing material prices have aggressively increased 75.2 percent in the United States from July to October of this year.
Our pricing team continually monitors areas where catastrophes and storms have occurred to help determine how local pricing may be affected and make any warranted changes from our research. When we examined the assignments filed through XactAnalysis, we found that the total number of assignments filed in Lake Charles increased 3,398 percent from July to September due to Hurricane Laura while the rest of Louisiana increased 276 percent. The recent derecho in the Midwest also caused a large spike in assignment volume in Iowa, showing an increase of 1,016 percent in Cedar Rapids from July to August while the rest of Iowa increased 314 percent during the same time period.
These two storms also caused an increase in retail labor rates. In Louisiana, the average of all retail labor rates increased 11.6 percent in Lake Charles and 5.73 percent as a state since the start of the third quarter. In Iowa, the average of all retail labor rates increased 7.97 percent in Cedar Rapids and 2.69 percent as a state during the same time period.
Due to the current impacts of COVID-19, Xactware is closely monitoring the cost of personal protective equipment (PPE). Since March 2020, the average national cost of PPE items increased 51 percent. We will continue to monitor this situation and report changes as they arise.
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 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.
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