In addition to evaluating the increases in lumber prices, we also pulled data from the Producer Price Index (Bureau of Labor Statistics) for some of the other main inputs to a residential construction project.
Concrete Products (Including Brick & Block)*
Gypsum (Including Drywall)*
Asphalt (Including Roofing, Siding, & Asphalt Related Products)*
Nonferrous Wire & Cable (Inclduing Electric & Copper Wiring)*
370
270 272 274 276 278 280 282 284 286 288 290
265
360
320
260
350
300
255
340
280
250
330
260
245
320
240
240
310
220
235
300
290
230
200
*Not seasonally adjusted | Source: U.S. Bureau of Labor Statistics
When we run these factors through a total project cost calculator, which includes overhead but does not account for the recent increase in labor costs, we come up with a total construction cost increase of 11% . If we use the rule of thumb that the cost of material makes up approximately 40% of the total cost then this figure is consistent with the recent NAHB survey of single family home builders which estimated a 26.1% increase in material costs in the past 12 months (26.1% * 40% = 10.4%). Based on a composite of coastal homeowner’s data, this translates to an average increase in (re)construction cost of approximately $44,000 for the average 2,500 square foot home within 30 miles of a coastline. This is based on the current cost of material and does not factor in any post-event demand surge. Further, the labor market is in a transitional phase and we expect the true overall change in cost to be greater.
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