June 13, 2016


Why Are Construction Costs Rising?

  • Despite the global collapse of commodity prices, local prices of construction materials have not fallen.
  • The size of the construction workforce remains well below pre-recession levels, which has led to labor shortages in several major markets.
  • Growth in multifamily construction activity is partially offsetting the steep decline in single-family homebuilding compared with the last cycle, driving up construction costs.
  • Supply-demand imbalances have contributed to strong growth in average construction wages, particularly in the Southwest.
  • Nonetheless, the pace of overall construction cost inflation has been moderate in recent years, relative to the prior cycle.


Read all three parts for the 2016 U.S. Office Viewpoint series on construction costs: