As increases slow, reconstruction costs show signs of stabilizing

January 18, 2023 / 2 min read

Verisk recently released its latest 360Value^® Quarterly Reconstruction Cost Analysis, which offers an overview of current reconstruction cost trends at the national and state levels for the United States from January 2022 to January 2023.

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Lumber, a key driver in reconstruction cost peaks in recent years, has decreased nine months in a row.

Total reconstruction costs, including materials and retail labor, increased 6.8% from January 2022 to January 2023. This slight drop follows the 9.3% increase from October 2021 to October 2022. Quarterly reconstruction costs increased by 0.9%, a small shift from the 1.1% increase last quarter.

All states see increases in reconstruction costs

Residential costs in total increased 7.5% from January 2022 to January 2023 and 0.4% from October 2022 to January 2023. For residential reconstruction costs, Florida had the largest increase at 12.4%, followed by South Carolina (11.0%) and New Mexico (10.7%). Arizona’s rank changed most significantly, rising from the 47^th-highest cost increase in October 2022 to the ninth-highest in January 2023.

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Commercial costs in total increased 6.1% from January 2022 to January 2023 and 1.3% from October 2022 to January 2023. Florida had the largest increase in commercial reconstruction costs at 11.0%, followed by Utah (9.5%) and New Mexico (9.4%). Louisiana had the largest shift in rank, rising from the 47^th-highest cost increase in October 2022 to the 13^th-highest in January 2023.

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Slowing down and steadying

Reconstruction cost increases have started to slow down and steady. Lumber, a key driver in reconstruction cost peaks in recent years, has decreased nine months in a row. This quarter, the composite is the only negative category, declining 5.1%. However, costs remain 61% higher than in pre-COVID times.

Interior trim increased the most among material composites, rising 22.1% from January 2022 to January 2023 due to the specialized skills used to manufacture pieces. Roofing followed shortly behind at 16.5%.

The cost of fuel used to transport and manufacture goods is decreasing for the first time since February 1, 2021.

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