Mortenson, a leading national builder and developer, today released its Q3 2022 Construction Cost Index report for Minneapolis and other major U.S. markets. According to data from the third quarter, which ended on September 30, nonresidential construction costs increased by +0.8% on average with a yearly percentage change of +9.6%.
The following quarterly average price changes were observed in the seven markets that Mortenson tracks: Chicago (+1.2%), Denver (+2%), Minneapolis (+0.25%), Phoenix (+2%), Portland (+0.33%), and Seattle (+0.35%). Milwaukee was flat this quarter, with no overall change. This is further pricing moderation across all markets from what was observed by Mortenson in Q2.
According to the report, materials based on the commodity market have started to level off or even experience pricing decreases, although product lead times and material shortages continue to be concerns. The third quarter continued to experience higher material shipping costs, even as fuel costs began a slight trend downward in some markets. Many cities continue to experience labor challenges due to worker shortages and strong local construction activity, especially with larger projects in many markets paying incentives to attract workforce.
“While early indications point to a slowing U.S. economy, overall non-residential construction activity remains steady and the outlook for 2023 is holding positive with certain building categories charging ahead at a faster pace,” said Clark Taylor, vice president of estimating at Mortenson. “Construction cost-wise, while we are seeing the pace of some input cost increases start to slow, or even decrease, others continue to increase significantly.”
Based on market data, observations and insights, Mortenson sees increased input price moderation moving into 2023. Workforce limitations, increases in material shipping costs, and product lead times and material shortages remain a challenge.
Mortenson tracks and reports on seven metropolitan areas in the U.S. including Chicago, Denver, Milwaukee, Minneapolis, Phoenix, Portland, and Seattle. The Mortenson Construction Cost Index is calculated quarterly by pricing representative non-residential construction projects in various metropolitan areas. It is part of a portfolio of industry insights and market studies provided by Mortenson.
For nationwide construction cost index data visit: Mortenson.com/Cost-Index.
Download the Q3 2022 Construction Cost Index report for your region: