Construction Costs for 50 U.S. Cities Show Interesting Shifts
Alex Carrick
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Seed Newsvine |
The accompanying table and 50 graphs are based on RSMeans’ Construction Cost Indices (CCI) for major cities across the U.S. The introductory table records each city’s construction cost relative to the 30-city national average, then also shows the ranking of cities based on the year-over-year percentage change in their cost indices and the quarter-to-quarter percentage change annualized. New York is the leader on a year-over-year basis, while Kansas City has recorded the largest quarter-over-quarter percent change.
U.S. Cities Ranked by Relative Cost of Construction
The first set of numbers in the table records that New York is the most expensive city in which to build in the United States, with a 33% premium over the national average. San Francisco, Honolulu, San José, Oakland and Boston are also among the more expensive centers for construction.
Cities in the south remain among the lowest–cost in which to build, including Charlotte, Austin, San Antonio, Jacksonville, Dallas and Memphis.
It is interesting to note that Las Vegas, Portland, Buffalo, Cleveland, Washington, Pittsburgh and Toledo all have construction costs that are around the national average.
Cities Ranked by Year-over-year Percentage Change
Cities in Texas are being stoked by an energy-driven boom, as world oil prices have set new record highs this year. However, among all cities, Houston (+2.6%) still managed to record the lowest year-over-year increase in its construction cost index, as set out in the second set of numbers.
At the bottom of the year-over-year ranking stands Detroit (+2.8%), but this is not much of a surprise given the difficult circumstances that the auto-sector is currently facing due to skyrocketing gasoline prices.
The national year-over-year increase in the Construction Cost Index, at +4.2%, can be compared with the latest increase in the all-items Consumer Price Index (CPI), which was +5.0%.
Cities Ranked by Quarter-over-quarter Percentage Change
As for quarter-to-quarter percentage changes (annualized), a number of cities in the centre of the country (Kansas City and St. Louis) and in the south (Dallas, Miami, Nashville, etc.) occupy positions at the top of the listing. At the other extreme, a number of the biggest cities in the country − Detroit, Minneapolis, Los Angeles, Chicago and Houston − are at the bottom.
It is quite common for there to be a jump-up in costs in the first quarter of the year. This was certainly the case in 2004, which was the last year during which there was a “peaking” in construction costs.
The take-off in commodity prices (especially for oil) in the first half of this year suggests that another period of strong construction cost gains is working its way through the system. This is likely to become more apparent in the next quarterly results for the CCI, due to be reported for July 2008.
For evidence that construction costs are heating up, see the Market Insights story entitled “Construction Materials Prices Jump 1.8% in June”.
