By Roland Murphy for AZBEX
Rider Levett Bucknall’s National Construction Cost Index kept climbing in the second quarter, growing to 234.42, versus 228.93 in Q1.
In Q2 2017 the Index stood at 182.16 and climbed steadily to 208.96 in Q2 2020. Because of the pandemic, the index remained largely flat until Q1 2021 when it began climbing from its then-rate of 211.90. By Q2 2021, the rate accelerated, continuing to hook upward on through the end of this June.
The firm notes that the U.S. quarterly national average construction cost increase is approximately 2.4%, compared to 7.5% year-over-year.
On a city-by-city review of the Comparative Cost Index, Seattle leads the nation in annual percent change. RLB explains its Comparative Cost Index by saying: “Our Comparative Cost Index tracks the ‘true’ bid cost of construction, which includes, in addition to costs of labor and materials, general contractor and sub-contractor overhead costs and fees (profit). The index also includes applicable sales/use taxes that ‘standard’ construction contracts attract.”
Seattle hit an April 2022 CCI number of 22,038, up from 19,804 the previous year – a percent change of 11.28.
Phoenix’s percent change was 6.37%, going from 16,824 last April to 17,897 this year.
Honolulu’s percent change of 4.59% was the lowest of the 12 cities tracked, going from 26,891 last year to 28,125 this April.
RLB attributes many of the current challenges in the construction market to the ongoing labor shortage. In announcing the report, the firm said, “In the past two months, spending on nonresidential construction has declined, with many industry experts attributing this to the workforce shortage,” later adding, “While facing workforce shortages is not a new challenge for our industry, the current shortage is one factor in a confluence of ongoing issues including the pandemic, supply chain challenges for raw materials and finished products, rising fuel prices, and the transportation industry’s workforce shortage.”
The full report is available here.