Verisk recently released its latest 360Value® Quarterly Reconstruction Cost Analysis, which offers an overview of current reconstruction cost trends at the national and state/provincial levels for the United States and Canada from January 2021 to January 2022.
U.S. reconstruction costs continue slower gains
Total reconstruction costs, including materials and retail labor, rose 7.2 percent at the national level in the United States from January 2021 to January 2022. This rate of increase was up from 5.8 percent between October 2020 and October 2021. Lumber rose a steady 9.8 percent between January 2021 and January 2022, more than double the 4.1 percent gain recorded in the October 2021 period, but well off the historic 162.7 percent spike in July 2021.
Lumber prices are still well above pre-pandemic levels as both the home building and renovation markets continue to boost demand.
Reconstruction costs increased in all states. New York had the largest increase at 11.5 percent, with Wisconsin and Delaware following behind, both up 9.6 percent. Montana had the biggest change in ranking among the states, leaping from the 42nd highest cost increase in October 2021 to 15th in January 2022, with prices increasing 7.9 percent in the year-over-year period.
Combined costs for material composites increased 7.5 percent from January 2021 to January 2022, up from October 2020 to October 2021, when material costs rose 5.4 percent. Prices were up for all categories. Lumber rose 9.8 percent from January 2021 to January 2022. Lumber prices are still well above pre-pandemic levels as both the home building and renovation markets continue to boost demand. U.S. lumber costs are also affected by the recent doubling of tariffs on Canadian lumber1, with Canada supplying about 28 percent of U.S. lumber needs.2 While supply of lumber continues to be less constrained overall, materials shortages of some lumber-derived finished goods continue. The category with the largest gain this period was interior trim composite, which saw prices rise 26.6 percent year-over-year, continuing the spike from October when it rose 26.4 percent. A major factor in that category is the rising price of interior wood doors and associated materials, such as jambs. Overall, materials prices appear to be maintaining an ongoing, yet relatively moderate, increase.
Combined hourly retail labor rates increased 5.3 percent from January 2021 to January 2022, up from the 4.3 percent increase recorded from October 2020 to October 2021. Electrician and plumber costs increased the most, both rising 6.9 percent as demand for laborers outpaced supply. Opportunities for plumbers are projected to increase, with employment for electricians estimated to grow 9 percent from 2020 to 20303 while openings for plumbers, pipefitters, and steamfitters is predicted to rise 5 percent, about even with the growth in demand overall for construction trades workers.4
Canada reconstruction costs boosted by ongoing lumber gains
In Canada, total reconstruction costs, including materials and labor, rose 6.7 percent from January 2021 to January 2022, with increases primarily led by lumber, which rose 18.7 percent. During the fourth quarter of 2021 (October through December), reconstruction costs fell 0.1 percent, compared with a decline of 3.1 percent in the prior quarter.
All provinces experienced cost increases. Prince Edward Island and Newfoundland had the highest growth rates at 8.1 percent and 7.9 percent, respectively. Alberta and Ontario experienced the lowest increases at 5.9 percent and 5.2 percent, respectively.
Total material costs increased by 7.2 percent from January 2021 to January 2022. This was a dip from the 10.9 percent increase recorded between October 2020 and October 2021. Lumber continued to be the category experiencing the largest gain, with an 18.7 percent increase. However, this increase was well off the 35.9 percent hike recorded between October 2020 and October 2021. Interior trim composite, which includes finished lumber products such as interior doors, was up 17 percent in the year-over-year period, roughly even with the 16.8 percent gained in the prior quarter.
Combined retail labor rates increased 4.3 percent from January 2021 to January 2022, down a tick from October 2020 to October 2021, when labor rates rose 4.5 percent. Among the construction trades, plumber costs rose the most at 4.9 percent, with heating/AC mechanic costs following shortly after at 4.4 percent.