Pricing Data Services

Xactware Industry Trends Bulletin Key Pricing Trends

This bulletin gives a brief overview of recent pricing trends in the property insurance, construction, and restoration industries.

As a reporter of market-specific pricing information for repairing or rebuilding structures and replacing personal property, Xactware conducts hundreds of thousands of industry surveys, and reviews more than 100 million data points per year submitted through field estimates written by contractors and adjusters as well as electronic data feeds provided by retail merchants. This extensive library of research enables Xactware to provide a comprehensive report of important industry trends.

Materials

Material costs are highly variable and are sometimes impacted by factors such as fuel costs, changes to industry practices, or natural disasters. Xactware closely monitors a wide variety of material costs across the country to ensure its price lists reflect any recent changes to pricing. 

In the third quarter of 2017, Xactware observed changes to several material categories. The most significant change occurred in lumber material costs which increased 9.35 percent over the quarter and 14.03 percent since October 2016.

In 2014 and 2015, decreased demand for lumber lead to the industry decreasing the supply in 2016. Since then, the lumber market was gradually increasing costs. However, the increase this quarter is a significant jump compared to the gradual trend seen throughout the rest of the year. It was caused by multiple factors including a new tariff on lumber imported from Canada to the United States and severe fires in British Columbia. These events decrease the lumber supply, driving up the cost. Xactware is monitoring these factors and will continue to report any resulting pricing changes in future price list publications.

The Material Composite Index report tracks a combination of several commonly used material components, including floor covering, paint, and roofing among others. The index showed a 1.99 percent cost increase in the third quarter of 2017 and a 3.29 percent cost increase since October 2016.

Labor

Xactware’s Pricing Data Services also surveys thousands of contractors across the country each month to determine what they charge for labor. The most significant change we observed occurred in the cost of drywall installation, which increased 8.05 percent since October 2016 and 2.6 percent over the last quarter.

The Retail Labor Index report tracks a combination of several common trades, including floor covering, painting, and roofing among others. In the third quarter of 2017, the index showed a 1.28 percent cost increase. Between October 2016 and October 2017, the index showed a 4.25 percent cost increase.

Combined Trends

The combined labor and materials report is based on monthly building cost data published by Xactware. It comprises a set of commonly used items and may be used as an indicator of trends within the marketplace. The combination of labor and materials makes up the majority of Xactware price list items. Tracking the percent change for the cost of these items provides a good gauge of the general market.

The Combined Labor and Materials report showed a cost increase of 1.48 percent in the third quarter of 2017 and a 4.19 percent increase since October 2016.

 

Fuel Costs

Fuel costs are extremely volatile and are a factor in item pricing. High oil prices can push down the price of some raw materials. Since October 2016, fuel prices increased 14.25 percent and they increased 13.5 percent over the third quarter of 2017.

These significant increases to the cost of fuel in the United States are primarily caused by the closure of 8[1] oil refineries in Texas during the Hurricane and its aftermath. Between August 28 and September 4, the national gasoline cost average increased 11.67 percent. Since that time, costs have decreased slightly, leaving us with an overall increase for the quarter of 13.5 percent. Forbes[2] and others report that the crude oil and gasoline industry will return to normal soon and costs will continue the gradual increase seen throughout the first part of 2017.


Xactware’s Pricing Data Services carefully tracks fuel costs to ensure accurate pricing. 

Impact of the Hurricanes

Hurricanes Harvey and Irma caused catastrophic damage throughout the Gulf Coast, particularly in Texas and Florida. As we’ve already seen, these storms had a significant impact on fuel costs. Additionally, Xactware has seen a drastic increase in the number of claims filed in August and September in those states and we anticipate that claims will continue to be submitted and processed over the next several months.

In disaster situations, suppliers try to anticipate the needs and increase inventory to meet demands. However, we find that there can be extreme pressure put on the labor pool in the affected areas so retail labor costs tend to increase. This was the case in both Texas and Florida.

After Hurricane Harvey, the affected areas in Texas[1] experienced a 3.12 percent increase for the combined cost of material and labor. Overall, the average retail labor rate for all trades increased 4.3 percent in the specified areas. The combined rate includes the cost of labor for all trades. However, certain trades experienced significantly higher cost increases than others. The largest percent change for an individual change was for the cost of a drywall installer and finisher which increased 11.96 percent since September.

Florida experienced similar increases after Hurricane Irma. The state experienced a 1.88 percent cost increase for the combined cost of material and labor. However, the average retail labor rate of all trades increased 4.2 percent for the whole state. The highest percent increase for an individual trade was for the cost of a cleaning technician which increased 15.47 percent.

Common Categories

This quarter, we examined the top 10 most used categories and the top 10 most expensive categories in each state and Washington, D.C.

We discovered that Painting is in the top 10 most common categories in every state. Roofing is the next most common category: it appears in the top 10 category list for 49 states. Appliances, electrical, fencing, finish hardware, fireplaces, and metal structures and components were only in the top ten most common category lists for one state each.

When we examined the top ten most expensive categories for each state, we found that roofing and painting are both found on all 51 lists of the most expensive categories.



[1] Texas price list areas included in this analysis: Austin, Bay City, Beaumont, College Station, Corpus Christi, Galveston, Houston, San Antonio, The Woodlands, and Victoria.

Where to Learn More

Annual Property Report

Xactware publishes annual property reports that focus on key trends during the previous calendar year. To order a copy of Xactware’s Property Report for the United States or Canada, please visit the Xactware Online Store.

Industry Trend Reports

Using Industry Trend Reports, Xactware customers can examine pricing trends on national, state or province, and local levels for key material and labor pricing changes in multiple trades. Trends can be viewed by the month or over extended periods of time. For more information about Xactware’s Industry Trend Reports, or to receive access to them, please contact your sales representative or call 1-800-424-9228.

Pricing Methodology White Paper

For more information about Xactware’s methodology for researching and publishing pricing information, please see the Pricing Research Methodology white paper on the eService Center.

The values reported in this bulletin are national averages for the United States and will vary from local prices.

 

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