By Roland Murphy for AZBEX
Construction costs continue to rise across the country, but the latest Rider Levett Bucknall Quarterly Construction Cost Report shows Phoenix costs going up at consistently lessening rates than other major markets.
October 2023 data for the Phoenix market shows a cost index increase of 1.04%. In October 2022 the rate was 2.1%, and the index has steadily decreased over the intervening quarters. Of the 12 major markets tracked, only Los Angeles has seen a similarly consistent gradual stepdown. All the others have, to varying degrees, shown a set of spikes and dips.
Six of the tracked U.S. markets showed increases greater than the national average, while six others—including Phoenix—had lower than average gains. According to the announcement accompanying the report, “With current data from mid-Q4 2023, the latest RLB quarterly cost report shows that the national average increase in construction costs was 1.32% over the previous quarter, with Boston, Chicago, Honolulu, Portland, Seattle and Washington D.C. experiencing increases over the national average this quarter. Denver, Las Vegas, Los Angeles, New York, Phoenix, and San Francisco experienced gains that were less than the national average.”
Tracked quarterly over the year, Phoenix’s percent increases break down as follows:
- October 2022: 2.1%;
- January 2023: 1.60%;
- April 2023: 1.36%;
- July 2023: 1.3%, and
- October 2023: 1.04%.
Seattle reported the highest annual percentage gain for October, coming in at 7.76%. Washington, D.C. was lowest at 4.76%. Phoenix’s annual percent change was 5.42%.
The release announcement highlights three primary points of interest for quarterly costs and the overall construction-related economy. Specifically:
- The U.S. quarterly national average increase in construction cost is approximately 1.53% and 5.28% year-over-year;
- The construction unemployment rate is up slightly to 3.8% from 3.4% in the same period last year, and
- The Architectural Billings Index is 44.3, the third month in a row of significant decreases.
Arizona reported a total of 205,400 construction jobs at the end of November, an increase of 1.6% for the month and 3.5% for the year, according to the Arizona Office of Economic Opportunity.
Addressing both labor and other concerns across the national economy in his introduction to the report, RLB President, North America Paul Brussow said, “Labor continues to be shrouded in a dark cloud as the most recent job opening numbers show a record 450,000 openings in the construction industry for the last reported month and unemployment at 3.8 percent. However, akin to finance costs and interest rates, labor shortages are not prohibiting construction projects from moving forward.”