To keep our clients informed of current market trends, CoreLogic® has curated a monthly bulletin of regional construction cost insights that are reflected in the CoreLogic Claims Pricing Database. CoreLogic’s experts combine current month pricing data with four common loss scenarios creating a model to illustrate the impact.
These data models are then applied across the nine regions noted above and compared to both the prior month and the year to date. Expert analysis is provided to supplement these data trends and provide additional insight into key drivers.
March Pricing Insights
As Q1 ends, CoreLogic’s pricing team continues to focus their efforts on collecting feedback, specifically labor rates across several categories. Market surveys are in and being analyzed; focus groups are set to begin in April and the volume of data we are receiving from the Pricing Database Feedback loop is building. We invite you to join in and engage with us. Check out the different ways you can here.
Analysis of March pricing data shows stability across most Labor and Material categories. Overall, the basket of goods held flat, up .1% from February but remains elevated 17% compared to March of 2022. 3-month trends indicate material costs continue to recede very slowly from 2022’s inflation highs, while labor costs remain on the rise. Combined, the two offset and most line-item components that include a traditional mix of labor and materials are holding somewhat steady.
Material components declined .2% from February but remain up 15% from where they were a year ago in March 2022. Materials associated with the mechanical trades saw some of the largest increases in 2022 and thus far in 2023, show higher levels of resiliency. Other materials such as cabinetry and raw lumber have fully recovered and for the first time in 12 months, are below Q1 2022 values.
In March, changes in labor pricing are the result from the ongoing deep dive analysis as well as client feedback derived from our Pricing Database Feedback loop. Notable changes are found in Roofing labor but remain market specific. Areas of greatest increase are found in Texas, Colorado, and Minnesota. Textile cleaning and electronics restoration labor rates continue to track upwardly countrywide but with lower velocity than in January and February. Deep dive labor analysis continues into the Q2 and the categories under review expand considerably. You can help fuel our investigation by providing feedback.
Property Claim Scenarios
To demonstrate how changes in pricing impact typical loss costs, CoreLogic has replicated the estimating components found in the following most common loss scenarios. The sum of these materials is referred to as “The Basket of Goods”.
Fire/Lightning (Large Loss)
Large loss claims are modeled from a typical fire loss where all components of a home’s construction are affected. These losses typically exceed $100k.
Losses represented within this group are typical of event activity consisting of wind and/or hail damage requiring roof replacement, partial siding replacement and accompanying accessories.
Water (Interior Multi-Room Losses)
Moderately complex losses are modeled using the bathroom as the origin of loss. A combination of replacement and repair of common household finishes are included.
Water Mitigation (Drying)
Typical drying costs for a residential structure including water extraction, removal of wet material and use of drying equipment is included.
Fire/Lightning (Large Loss) Insights: 12 Month Trend
- Decreasing .5% compared to prior month, the Large Loss scenario saw the largest decline of all estimating scenarios with the March release, however as compared to March of 2022, the scenario remains elevated 15.5% overall.
- Continuing to post month over month declines, raw wood components such as dimensional lumber are a key driver in pushing the cost of reconstruction and repairs in large loss scenarios downward.
- Speciality materials and labor involved in the mechanical trades remain elevated nearly 40% in our 12-month analysis.
Wind/Hail (Exterior/Roof) Insights: 12 Month Trend
- The Wind and Hail scenario saw the largest month / month increase at +1% and continues to increase from March 2022, up 15% overall.
- These increases are fueled by both materials and labor:
- Roofing materials remain up 16% from the prior year, +.5% to prior month.
- Roofing labor costs have continued to rise month over month and are expected to continue into Q2. Cumulatively roofing labor rates have increased over 27% compared to prior year.
- As we enter springtime storm season, the internal pricing team remains focused on collecting and analyzing labor rate data in and across loss prone markets.
Water (Interior Reconstruction) Insights: 12 Month Trend
- Up 17% on average over prior year and flat to prior month, the water scenario is experiencing interesting opposing pressures.
- Materials associated with drywall and painting continue to increase and with the March release, this trend continues. Rising again, 1.5% on average, 12-month development shows drywall and paint have now climbed + 20% with this release.
- Doors, interior trim as well as insulation saw a slight decline this month. Trim has declined 3 months running and is now nearing March 2022 costs.
Water Mitigation (Drying) Insights: 12 Month Trend
- Water remediation technician labor rates were re-baselined in 2022. Comparing today’s labor rates to where they were 1 year ago, there has been a 33% increase on average overall. This remains the largest driver of the water mitigation scenario.
- Only minor fluctuations have been seen in materials associated with drying and remediation efforts and this remains a small component of this scenario.
- Equipment rates on the other hand are a substantial factor and are currently being investigated by CoreLogic’s pricing team to ensure our pricing database reflects the pace of change seen in recent months in the market.
About CoreLogic Data Research
CoreLogic develops this report using up-to-date materials and labor costs. CoreLogic’s team of analysts continuously researches hard costs such as labor, material, and equipment, including mark-ups, and updates its database every month. Our research also covers soft costs such as taxes and fringe benefits for reconstruction work performed in the United States for the insurance industry. CoreLogic monitors demographics and econometric statistics, government indicators, and localization requirements, including market trends from thousands of unique economies throughout the United States.
Other factors in this process include the following:
- Wage rates for more than 85 union and non-union trades
- Over 100,000 construction data points
- Productivity rates and crew sizes
- Building code requirements and localized cost variables
In addition, we validate cost data by analyzing field inspection records, contractor estimates, phone surveys, and partial and complete loss claim information. Please complete the online form to provide feedback or request information on any items in our construction database. For further explanation or questions, please contact your sales executive or account manager.
CoreLogic is the leading property insights and technology solutions provider enabling healthy housing markets and thriving communities. Through its enhanced property data solutions, services, and technologies, CoreLogic enables real estate professionals, financial institutions, insurance carriers, government agencies, and other housing market participants to help millions of people find, buy, and restore their homes. For more information, please visit www.corelogic.com.
NOTE: The building material, labor, and other cost information in this bulletin is generated using research, sources and methods current as of the date of this bulletin and is intended only to provide an estimated average of reconstruction cost trends in the specified general geographic regions of the United States. This cost information may vary further when adjusting claim values for specific property locations or specific business conditions.