North America construction costs hit new high

Cost Index grew 4.44% annually in Q4 2024

North America construction costs hit new high

The fourth quarter of 2024 recorded continued growth in construction costs across North America, with significant trends in material pricing, project spending, and sector performance detailed in Rider Levett Bucknall’s (RLB) latest quarterly report.

According to the US Department of Commerce, construction put-in-place reached a seasonally adjusted annual rate of $2.17 trillion in October 2024. This figure represents a 0.4% increase from the revised September estimate of $2.16 trillion and a 5% rise from October 2023.

RLB’s National Construction Cost Index (NCCI) for the US reached 270.75 in Q4 2024, up 1.11% from Q3 2024, equivalent to an annualized 4.44% increase.

Regions like Boston, Chicago, and Washington, DC, saw above-average increases, while cities like Denver and San Francisco experienced more moderate growth.

Material pricing trends

Material costs reflected mixed patterns compared to 2023.

Copper prices surged by 14.4%, the highest increase among tracked materials. Cement, gypsum, and structural block also saw rises of 4.7% to 5.2%. Conversely, steel product prices dropped by 6.9%.

These fluctuations are partially attributed to energy price volatility and lingering trade policy uncertainties.

Sector insights

Commercial, residential, and mixed-use projects remain dominant, making up the majority of construction activity.

RLB reports that residential demand, particularly in multi-family developments, has driven up building permit values in cities like Calgary and Toronto. For example, Toronto reported a 44.4% year-over-year increase in residential sales during Q4 2024.

In Canada, Alberta’s GDP grew by 1.8%, supported by stable energy production and a surge in housing construction, with Calgary issuing $798.4 million in building permits. Ontario’s infrastructure spending also played a key role, with plans for $191 billion in projects over the next decade.

Industry outlook

Looking ahead, RLB highlighted potential challenges from evolving trade policies, which could affect material costs if tariffs are implemented. Despite these uncertainties, ongoing investments in infrastructure and housing indicate sustained activity in key markets.

What do you think about the trends in construction costs and their impact on the economy? Share your thoughts in the comments below.