Reconstruction Cost Trends: Quarterly Insights for Brokers and Fiduciaries

Navigating the dynamic real estate insurance landscape requires staying ahead of cost trends. The Q4 2024 360Value Quarterly Reconstruction Cost Analysis provides a comprehensive look at the latest reconstruction cost developments across the U.S., including materials, labor, and regional patterns. Here’s what brokers and fiduciaries need to know to protect portfolios and enhance insurance strategies.

Key Market Trends for Q4 2024

1. Nationwide Cost Growth Moderates

Total reconstruction costs grew 4.9% year-over-year (October 2023–October 2024), slightly slower than the prior year’s 5.1% increase.

Quarterly growth also eased, rising 1.4% in Q4, compared to 1.6% in Q3, reflecting a broader stabilization trend.

2. Residential Reconstruction Costs Show Regional Variability

Nationwide, residential costs rose 4.2%, with all states experiencing increases.

Top Movers: New Hampshire led with a 7.66% year-over-year increase, followed by Nebraska (6.41%) and Kansas (6.20%). Minnesota had the largest rank improvement, climbing from 42nd to 6th place, with costs increasing 5.62%.

Biggest Declines: Hawaii fell in rankings from 14th to 48th, with a modest 2.77% increase, while Massachusetts dropped from 9th to 24th, despite a 4.02% gain.

3. Commercial Reconstruction Costs Lead the Way

Commercial reconstruction costs grew faster than residential at 5.6% year-over-year, highlighting demand in non-residential sectors.

Top Performers: New Hampshire surged by 11.92%, followed by New York (8.13%) and Montana (7.93%). Kansas saw a leap from 39th to 4th place with a 7.92% increase.

Lagging States: Hawaii and Maryland dropped significantly, showing 4.88% and 3.39% growth, respectively.

4. Material Cost Trends Reflect Shifting Dynamics

Overall, material costs rose by 1.9%, with fluctuations throughout 2024. Concrete prices climbed the most, up 8.5%, followed by paint at 5.1%. Lumber was the exception, showing a 2.2% decline due to volatile sheathing prices.

5. Labor Costs Accelerate

Combined labor costs increased 4.7% year-over-year, driven by robust demand and skilled trade shortages. Concrete masons led with an unprecedented 28% increase in hourly rates over 12 months. Other categories, such as drywall installers and plumbers, saw smaller but steady growth ranging from 1.4% to 4.1%.

What This Means for Brokers and Fiduciaries

These trends emphasize the importance of precise data in setting premiums, crafting policies, and adjusting strategies. As reconstruction costs shift, SES Risk Solutions empowers brokers and fiduciaries to navigate uncertainties with innovative tools and expert support:

QUBIE Platform: Providing instant insurance solutions for single-family rentals with unparalleled speed and simplicity.

Master Policies: Tailored for fiduciaries and brokers managing large real estate portfolios.

SES combines cutting-edge technology with 35+ years of expertise to ensure brokers and fiduciaries stay informed and competitive.

Looking Ahead to 2025

Cost trends are expected to persist into the first half of 2025, with residential reconstruction projected to rise 1.49% and commercial costs 1.98% by April. As labor and material markets remain volatile, aligning with an expert partner like SES ensures portfolios are prepared for what’s next.