Reconstruction Costs Skyrocket Over 60% in a Decade, but Growth Slows for 2025

Reconstruction costs in the U.S. have increased significantly over the past decade, with national residential costs rising by 63.7% and commercial costs by 58.4% since 2014. However, Verisk’s Q4 2024 report suggests a slowdown in growth, with projections indicating that cost increases in 2025 will align more closely with pre-pandemic trends.

Between October 2014 and October 2019, national residential reconstruction costs grew by 19.8%, followed by a sharper 43.9% rise from 2019 to 2024. Commercial reconstruction costs followed a similar trajectory, with a 16.6% increase from 2014 to 2019 and a 41.8% rise in the subsequent five years. The COVID-19 pandemic played a key role in these sharp increases, driving a 25% rise in costs between March 2020 and May 2023.

Material and labor costs remain a significant factor in reconstruction expenses. Lumber prices surged nearly 40% from 2019 to 2024, with states like Montana, Washington, and Utah experiencing increases over 50%. However, recent data suggests some stabilization, with Verisk projecting modest growth of 2% for residential reconstruction and 2.2% for commercial from January to July 2025.