New data from Rider Levett Bucknall, an international construction services and consulting firm, indicates U.S. construction costs are on the rise, as a smaller post-recession construction industry continues to bounce back.
RLB's First Quarter 2015 USA Construction Cost Report provides a numerical explanation of the position the industry stands in currently: with costs of materials and labor gradually increasing, the demand for subcontractors "has led to upward pressure on bid prices in busy areas," said Julian Anderson, president of RLB, in an email.
Falling gasoline prices in the first quarter of 2015, translating to a falling energy index and the Consumer Price Index (CPI) falling at a rate of 4.03 percent, also contributed to the construction cost inflation. Construction cost inflation's first quarter annualized rate stands at 4.64 percent.
The chart above shows the national construction cost index increase from January 2010 to January 2015, from low 140's to just under 163.
The report's research shows a 5.5 percent increase in the national average in construction cost from that January 2014 and December 2014. The city with the highest annual increase is Honolulu, with 13 percent; meanwhile, cities such as Washington, D.C., New York, Denver, and San Francisco witnessed milder increases, ranging from 4 percent to 6 percent.
In a summary, report authors note:
Although the actual costs of labor and material continue to increase slowly, the gap between demand and supply leads to upward pressure on bid prices as increasing construction activity chases static resource availability.