Verisk recently released its latest 360Value® Quarterly Cost Update, which offers an overview of current reconstruction cost trends at the national and state/provincial levels for the United States and Canada from October 2019 to October 2020.
U.S. total reconstruction costs nearly double
Total reconstruction costs, including materials and retail labor, surged 9.2% at the national level in the United States from October 2019 to October 2020, nearly double the 4.8% growth seen from July 2019 to July 2020. This is the highest increase seen in recent memory. Costs increased sharply in the third quarter of 2020 (July through September) at 5.0%.
Reconstruction costs increased in all states, with the largest changes seen in Rhode Island and Connecticut at 12.6% and Idaho at 12.5%. New Hampshire showed the most variable cost increases, as the state climbed 31 rank positions.
The materials component of costs showed increases in all categories, with lumber costs the extreme outlier at 59.7% in a market reflecting high demand driven by increased building activity, supply shortages stemming from pandemic-related shutdowns, and U.S. tariffs on Canadian lumber. On the labor side, drywall installer/finisher costs again saw the fastest rate of increase at 13.8%.
Canada continues accelerating cost growth trend
In Canada, at the national level, total costs increased 6.3% from October 2019 to October 2020, a significant change that continued a trend of accelerating cost growth. During the third quarter of 2020 (July through September), reconstruction costs grew 4.1%.
All ten provinces experienced cost increases in the latest reporting period. Increases in Quebec and Alberta were highest at 7.8% and 7.6%, respectively, while Saskatchewan and Prince Edward Island had the smallest increases at 5.1% and 5.4%, respectively.
Lumber costs soared 38.3%, up from the lowest category as of July 2020, to drive a sharp overall increase in the materials trend. This may reflect pandemic-related constraints on supply amid an increase in building activity. On the labor side, roofer costs grew the most at 7.3%.