Quarterly Construction Insights - corelogic.com...Feb 24, 2021 · CoreLogic tracks construction...

Quarterly Construction Insights

©2021 CoreLogic, Inc. All Rights Reserved.

Q4 2020

©2021 CoreLogic, Inc. All Rights Reserved. 2

Q4 2020

Executive Summary

The Quarterly Construction Insights is a review

of the state and health of the construction

economy and other relevant statistics

throughout the United States and Canada. This

CoreLogic report covers matters such as

material and labor costs for construction,

growth rates of these costs, permit approvals

for new construction, and construction jobs.

Why is construction important to begin with?

We owe it to the construction economy for

building the structures we need and love – our

homes, workplaces, marketplaces, and shared

community spaces.

Changes in material and labor costs can have a

significant impact on property owners. When

costs to rebuild increase, owners may find that

they are underinsured in the event of damages

from natural hazards or accidents. In

December 2020, costs for lumber, a significant

component of construction, have increased by

34% YOY and 40% YOY in the United States

and Canada, respectively, as the COVID-19

pandemic has created supply constraints.

Without reassessing a home’s reconstruction

cost value (RCV), homeowners may find

themselves underinsured after an adverse

event. Higher construction costs also mean

less new housing stock and jobs in

construction, constraining the housing supply

and increasing home prices. Home prices in Q4

2020 have seen a 3.5% increase for new

housing and an 8.3% increase for existing.

Fortunately, authorizations for new housing

permits were up 25% YOY in December, and in

the last quarter 152,000 jobs were created in

construction.

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Q4 2020

December Permit Authorizations Up 25% YOY, Lumber Costs Up 34% YOY, and Job Numbers Down 1.9% YOY

Material costs in the U.S. and Canada are higher than in December 2019. U.S. lumber costs

this December were 34% higher than last year.

Labor costs continue to grow faster in the U.S. than in Canada, with many key construction

occupations experiencing earnings growth over 4%. Roofer costs have increased the most

in the U.S. up 5.6% from last December.

Construction employment in December declined YOY by 1.9%. Overall U.S. unemployment

has declined to 6.8% and the USG and Chamber of Commerce Construction Index has

continued to remained low at 60, indicating uncertainty in the construction market.



YOY Material Trends December 2019 to December 2020

• All construction material aggregates have seen cost

increases from this time last year.

• Prices for drywall have increased at the slowest rate,

remaining stable with an increase of less than 1%.

• Lumber has seen a significant increase in YOY cost at

nearly 34%.

• The average for all monitored U.S. commercial building

materials in December 2020 had an overall annual cost

increase of 9.6%.

Overall, costs in Q4 have increased 3.4% from last quarter.

US. Construction Material Aggregates

Source: CoreLogic. Note: Cost changes are not adjusted for inflation

-20%

-10%

0%

10%

20%

30%

40%

D J F M A M J J A S O N D

Masonry Drywall Steel Roofing

Electrical Lumber Insulation Plumbing


• All construction material aggregates have seen cost increases

from this time last year.

• Prices for drywall have increased at the slowest rate with an

increase of 1%.

• Lumber has seen a significant increase in YOY cost at nearly

40%.

• The average for all monitored Canadian commercial building

materials in December 2020 had an overall annual cost

increase of 12%.

Overall, costs in Q4 have slightly increased 9.2% from last quarter.

Canada Construction Material Aggregates

YOY Material Trends December 2019 to December 2020


-20%

-10%

0%

10%

20%

30%

40%

D J F M A M J J A S O N D

Masonry Drywall Steel Roofing

Electrical Lumber Insulation Plumbing


Most Significant Cost Increases

Slowest Cost Growth

State Change

Iowa +7.3%

New York +7.0%

Utah +7.0%

State Change

North Dakota +3.3%

Hawaii +3.3%

New Mexico +3.4%


Materials in every state were more expensive in December 2020 than they were in December 2019.

Costs grew by at least 3.3% in every state.

December 2020 YOY Material Cost Changes by U.S. State




Province Change

New Brunswick +8.8%

Saskatchewan +8.7%

Nova Scotia +8.1%

Newfoundland and Labrador

+8.1%


Construction material costs in Canada are rising at high rates in every province. All provinces in the nation experienced

annual cost increases, especially New Brunswick and Saskatchewan.

December 2020 YOY Material Cost Changes by Canada Province



From December 2019 to December 2020, labor costs in the United States grew even faster YOY than last quarter, with cost

growth as high as 5.6% for roofers. Labor costs in Canada continue to remain relatively more stable, with cost growth highest

for plumbers at 2.8%.

Labor Costs in the U.S. and Canada Compared

Labor Cost Change by Occupation(percent change, December 2019 to December 2020)

Source: CoreLogic

0% 1% 2% 3% 4% 5% 6%

Carpenter

Electrician

Laborer

Painter

Plasterer

Plumber

Roofer

U.S. Canada

Note: Cost changes are not adjusted for inflation


Data may be revised from previous quarter or may not

end at current quarter

*in 1,000s

Sources: U.S. Bureau of the Census, National Association of Realtors, U.S. Bureau of Labor Statistics, The Conference Board,

Freddie Mac, CoreLogic

YOY Labor Costs Each Month in the U.S. YOY Labor Costs Each Month in Canada

Over the last year, labor costs in both the U.S. and Canada continued to grow.

However, the rate at which these costs grew varied considerably. Starting in the summer of 2020, labor cost growth in the U.S.

has climbed significantly. In Canada, labor cost growth has remained more stable.

Changes in Labor Cost Growth


1%

2%

3%

4%

5%

6%

Carpenter Electrician Laborer Painter

Plasterer Plumber Roofer

1%

2%

3%

4%

5%

6%

Carpenter Electrician Laborer Painter

Plasterer Plumber Roofer


The U.S. economy has seen significant disruptions over the

course of the pandemic. However, since last quarter, housing

starts, building permits, home sales, and consumer confidence

have all increased, while unemployment has dropped from

8.8% down to 6.8%. YOY changes in new home prices

increased from 1.5% to 3.5%, while YOY changes for existing

homes rose from 3.8% to 8.3%.

U.S Economic Indicators

Data may be revised from previous quarter or may not end at current quarter*in 1,000s

Sources: U.S. Bureau of the Census, National Association of Realtors, U.S. Bureau of Labor Statistics, The Conference Board, Freddie Mac, CoreLogic

Q3 2020 Q4 2020

Housing Starts* 1432 1592

Building Permits* 1501 1629

Home Sales*NewExisting

71109746137

76508736777

Unemployment 8.8% 6.8%

Consumer Confidence 93.1 93.8

30-Year Fixed 3.0% 2.76%

Q4 2019 Q4 2020

Home Price YOY ChangeNew (%)Existing (%)

1.5%3.8%

3.5%8.3%

ECONOMIC INDICATORS



Authorized Building Permits

(Units % Change) 12/2019 – 12/2020

Source: U.S. Census Bureau

Units Dec-19 Dec-20 % Change

1 63002 88538 41%

2 1758 2096 19%

3 or 4 1389 1435 3%

5+ 41151 41531 1%

Total 107300 133600 25%

U.S. permit authorizations in December 2020 bounced back at 25% total growth when compared to December 2019. Though all

types of units have seen an increase, 1 and 2 unit permits have dominated this trend with 41% and 19% growth. All regions have

seen an increase in permit authorizations with the South up 29%, the West and Midwest both up 24%, and the Northeast up 5%.

Changes in Permit Authorizations


Total Construction Employment in December 2020

7,413,000

152,000qtr/qtr

142,000yr/yr

Highest Annual GROWTH

South Dakota

8%Missouri

6%Kansas

6%

Largest Annual DECLINE

Vermont

-23%Iowa

-9%North Dakota

-7%

*Total percent from 9/2019 to 9/2020.

Source: Associated General Contractors of AmericaSource: U.S. Bureau of Labor Statistics

Construction employment totaled 7,413,000 in December, up 152,000 from September.

Employment in construction was down by 142,000 jobs over the past 12 months, a 1.9% decline.

Construction Job Growth by State


In Q4 2020, the USG Corporation and U.S. Chamber of Commerce stated the Commercial Construction Index increased three points from 57 to 60, remaining low ever since the index was 74 in Q1 2020. 83% of contractors are experiencing delays on projects, but 85% of contractors believe there will be sufficient opportunities for new business in the next 12 months. 31% of contractors are reporting a current shortage of wood/lumber.

Construction Confidence

Sources: USG Corporation and U.S Chamber of Commerce

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For more information, please call:

855.267.7027

© 2021 CoreLogic, Inc. All rights reserved.CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries.

CoreLogic tracks construction costs for commercial, residential and agricultural

construction of all types by researching a unique basket of goods (labor and

materials) all around the United States. This research is conducted monthly,

which allows us to monitor fluctuations to commonly used materials.

Quarterly Construction Insights - corelogic.com...Feb 24, 2021 · CoreLogic tracks construction...

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