The COVID-19 pandemic had a significant impact on construction costs, leading to sharp increases in material prices. And when it comes to reconstruction costs—the cost to replicate a building at current construction prices using like kind and quality materials, design, layout, and construction standards—from Q2 2020 to Q2 2021, those costs increased by an average of 16.6%, according to property information services provider CoreLogic. However, reconstruction costs began to stabilize between Q2 2022 and Q2 2023, declining by an average of 1.9%. Now in 2024, reconstruction cost increases are starting to slow, but not uniformly in all U.S. regions.
San Francisco had the smallest average growth (10.6%) in reconstruction costs and New York had the largest increase (22.7%) during the pandemic (Q2 2020-Q2 2021). However, although the growth spanned the two extremes, both cities were among the top three most expensive areas in terms of overall pricing.