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Phoenix Outpaces Nation in Construction Cost Increases

By July 15, 2021November 14th, 2022No Comments

By Corina Vanek | Phoenix Business Journal

The United States experienced the largest quarter-to-quarter increase in construction costs from the first quarter of 2021 to the second, according to Rider Levett Bucknall’s quarterly cost report, which has been studying changes in construction costs for about 20 years.

As a whole, the U.S. saw a 2.9% increase in costs over the quarter. Phoenix was among the markets that outpaced the nation for increase in construction costs, experiencing a 4.29% increase during the quarter.

Chicago, which saw a 4.67% increase over the quarter, was the market with the largest increase by percentage, but Portland, Washington D.C., New York and Boston also saw percentage increases higher than the national average. On the flip side, Honolulu, Denver, Seattle, San Francisco and Los Angeles all paced below the national percentage increase in Q1.

Scott Macpherson, executive vice president of Rider Levett Bucknall in Phoenix, said he was “surprised” to see the huge increase that Phoenix experienced while he was doing research for the report. However, he said, there has been quite a bit of volatility in pricing recently for construction materials, creating major increases and corrections over a short period of time.

Macpherson said the Covid-19 pandemic caused some factories that produce construction commodities to decrease production, and they have not been able to get back to normal production rates. Some other issues, including major plants experiencing shutdowns, like the deep freeze in Texas over the winter, have slowed production even more.

“The demand outstrips the supply, driving up the prices,” he said, listing increases in several materials used for construction, including lumber, steel, copper, cement and other building materials.

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