First Quarter Building Cost Index Reflects Strong Market Conditions

The First Quarter 2017 Turner Building Cost Index—which measures costs in the nonresidential building construction market in the United States—has increased to a value of 1,019. This represents a 1.29 percent quarterly increase from the Fourth Quarter 2016 and a 5.05 percent yearly increase from the First Quarter 2016.

As the market appears to continue its upward trend, the availability of skilled labor continues to influence the decision making of subcontractors, who are maintaining a selective approach to pursuits so as not to become overburdened. Additionally, while material delivery lead times have been relatively consistent throughout the last few quarters and indicators for extended lead times have not been apparent, a continued high level of construction activity has potential to extend lead times in the future.

“We are seeing highest cost increases in the Southeast, South and Northwest, with more modest increases in the Northeast and West,” said Attilio Rivetti, the Turner executive who prepares the cost index. “We have also seen moderate gains among raw material prices, particularly metals such as steel and iron. It will be important to maintain our focus on fluctuations in raw material costs, as they have the potential to be a driving factor in future escalation.”

Turner has prepared the construction cost forecast for more than 80 years. The building costs and price trends tracked by the Turner Building Cost Index may or may not reflect regional conditions. The cost index is determined by several factors considered on a nationwide basis, including labor rates and productivity, material prices and the competitive condition of the marketplace.