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. Verisk 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 2021, Verisk observed changes to six key material categories. Interior trim material had the largest quarterly increase of 17.23 percent, as well as the largest annual increase of 26.37 percent since October 2020.
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 10.73 percent cost decrease in the third quarter of 2021 and 5.36 percent cost increase since October 2020.
Verisk’s Pricing Data Services team also surveys thousands of contractors across the country each month to determine what they charge for labor. The labor cost of a siding installer had the largest quarterly percent change with a 4.91 percent increase, while the labor cost of a concrete mason had the highest annual percent change with a 12.68 percent increase.
The Retail Labor Index report tracks a combination of several common trades, including floor covering, painting, and roofing. In the third quarter of 2021 the index showed a 2.17 percent cost increase, and since October 2020 the index showed a 4.30 percent cost increase.
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 steel worker which increased 5.71 percent since July 2021.
The Combined Labor and Materials report is based on monthly building cost data published by Verisk. 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 Verisk price list items. Tracking the percent change for the cost of these items provides a valuable gauge of the general market.
The Combined Labor and Materials report showed a cost decrease of 4.19 percent in the third quarter of 2021 and a 10.69 percent increase since October 2020.
Fuel costs are extremely volatile and are a factor in item pricing. High oil prices can push up the price of some raw materials. Fuel costs increased 2.71 percent during the third quarter of 2021 and have increased by 46.38 percent since October 2020. Verisk’s Pricing Data Services carefully tracks fuel costs to ensure accurate pricing.
Since October 2020, lumber prices have increased by 4.08 percent in the United States. During the third quarter of 2021 lumber prices have continued to decrease, showing a downward trend of 37.86 percent. Sheathing materials have shown a similar trend and have decreased 46.93 percent from July 2021 to October 2021.
The Basket of Goods reports are also a good indicator of the impact that lumber costs have had on market pricing. Since October 2020, the Basket of Goods Labor & Material report has shown an increase of 10.69 percent. When framing components are removed from this basket of goods, the report shows an increase of 12.04 percent.
Since October 2020, the Basket of Goods Material report has shown an increase of 5.36 percent. When framing components are removed from this basket of goods, the report shows an increase of 9.03 percent.
Verisk is continually monitoring lumber materials and making warranted adjustments from focused surveys with suppliers for each monthly price list publication.
Due to the current impacts of COVID-19, Verisk is closely monitoring the cost of personal protective equipment (PPE). Since March 2020, the average national cost of PPE items increased 37.06 percent. Verisk will continue to monitor this situation and report changes as they arise.
Hurricane Ida made landfall near Port Fourchon, Louisiana on August 29th as a Category 4 hurricane that became the second-most damaging hurricane on record to make landfall in Louisiana, behind Hurricane Katrina in 2005. Extreme event modeling firm AIR Worldwide has updated its insured loss estimates for Hurricane Ida and now projects that Ida’s insured industry losses will range from $20 billion to $30 billion. AIR estimates wind and storm surge losses will range from $17 to $25 billion, and private-market insured losses from inland flooding will range from $2.5 billion to $5 billion.
Verisk closely monitors pricing changes after any disaster. We saw significant labor cost increases in various price list areas of Louisiana. Houma, Alexandria, New Orleans, Mandeville, and Baton Rouge had the most significant increases. On average in those five price list areas, the cost of an Insulation Installer increased the most at 19.9 percent, followed by a Drywall Installer/Finisher at 17.3 percent.
When we examined the Retail Labor Rate, we found that Louisiana, excluding the five areas that had the largest cost increases, experienced a 1.5 percent increase from September to October. When we examined Houma, Alexandria, New Orleans, Mandeville, and Baton Rouge, we found significantly higher rates of change with Houma having the largest increase of 12.1 percent.
These price increases are not unexpected after the demand surge created after a hurricane. When we examined the estimates filed through Xactimate, we found that the total number of estimates filed in the most affected areas increased an average of 5,109 percent from August to September; the rest of Louisiana decreased an average of 25 percent.
Annual Property Report
Verisk publishes annual property reports that focus on key trends during the previous calendar year. To order a copy of Verisk’s Property Report for the United States or Canada, please visit the Verisk Online Store.
Industry Trend Reports
Using Industry Trend Reports, Verisk 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 Verisk’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 Verisk’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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