Verisk recently released its latest 360Value^® Quarterly Reconstruction Cost Analysis. Total reconstruction costs, including materials and retail labor, increased 5.1% from October 2022 to October 2023. This uptick follows the 4.3% increase from July 2022 to July 2023. Quarterly reconstruction costs increased by 1.7%, a slight shift from the 1.0% increase last quarter.

Every state sees increases in reconstruction costs

Residential costs in total increased 3.9% from October 2022 to October 2023 and 1.9% from July 2023 to October 2023. Utah had the largest increase at 7.3%, followed by Rhode Island (6.4%) and Montana (6.2%)..

Commercial costs in total increased 6.3% from October 2022 to October 2023 and 1.6% from July 2023 to October 2023. Utah had the largest increase at 10.8%, followed by Rhode Island at 9.8%.

Material and labor cost changes

Combined costs for material composites increased 0.4% from October 2022 to October 2023—up from the 1.6% decrease recorded from July 2022 to July 2023. Quarterly material costs increased 2.9% from July 2023 to October 2023. The lumber composite remains the only negative composite this quarter at 19.9%, while concrete moves to become the primary driver of materials, increasing 10.8%.

Combined hourly retail labor costs increased 7.6% from October 2022 to October 2023, slightly below the 8.6% increase recorded in the prior two quarters. Labor has remained on a steady incline for the past few years.

Following recent catastrophe events, including hurricanes and wildfires, reconstruction costs, specifically labor, have seen large increases, often highly localized.

A future-focused look at trends

To help insurers navigate the increasing complexity in the market, Verisk has developed the Market Expectations Index for 360Value, which provides 3-, 6- and 12-month outlooks for residential and commercial structures. Calculations incorporate indicators for five key components that provide early signals for reconstruction costs.

Read the latest 360Value Quarterly Reconstruction Cost Analysis for more information on this quarter’s rises.

Trish Hopkinson: Trish Hopkinson is Head of 360Value for Verisk.

Joel Teemant: Joel Teemant is product director, 360Value commercial lines, for Verisk.