By Roland Murphy for AZBEX
With an annual percent change of 4.12%, Phoenix experienced the second-lowest fluctuation in its comparative construction costs to end 2024.
Rider Levett Bucknall’s “Fourth Quarter 2024 North America Quarterly Construction Cost Report” shows San Francisco had the lowest percent change at 3.84%. The greatest changes were seen in Chicago and Boston, with 6.25% and 5.40%, respectively.
The average national increase in construction costs was 1.1%, which is similar to the two preceding quarters.
Phoenix’s Q3 change was 3.88%.
Key data points from the report show:
- The U.S. quarterly national average increase in construction cost is approximately 1.11% and 4.69% year-over-year.
- The construction unemployment rate is 3.7%, down 0.1% in the same time period last year.
- Following a 20-month period of decline, the Architectural Billings Index is 50.3 and shows a balance between firms with increased and decreased billings.
In his report introduction message, RLB President, North America, Paul Brussow wrote, “Under the last two administrations, tariffs on imports like steel, aluminum, lumber, and other materials have increased input prices. While tariffs have had an impact, it was nothing compared to what inflation has done in recent years. When coupled with inflation and labor shortages, this trifecta, in the last few years, has strained supply chains, raised construction costs, and affected project timelines. Potential proposed additional tariffs on imports from Canada, Mexico, and China are more likely to exacerbate these challenges, particularly for metals, plastics, and essential construction materials, potentially adding thousands to the cost of residential and commercial projects. However, the construction industry has shown remarkable resilience in adapting to evolving challenges, continually finding innovative ways to deliver projects efficiently.”
He continued, “Proposed trade policies introduce uncertainty for contractors and manufacturers despite stable input prices in 2024. While high inventory levels and reduced production capacity could temporarily mitigate price spikes, they are unlikely to resolve long-term cost increases. As tariffs reshape global trade, our reliance on domestic production may face labor and resource constraints, further driving inflation and impacting the broader economy. Despite this forecast, with proactive strategies and collaboration across stakeholders, the industry is well-positioned to navigate these changes and seize opportunities for growth.”