Reconstruction cost – or replacement cost – is the cost of hiring a contractor to replace your home as it is, using materials and design of the same or similar quality. This amount is not the same as market value, which is the value of comparable homes that have sold in your area. Your home’s current reconstruction cost could be very different from its market value.
The U.S. economy is growing, unemployment is low, wages are up and all signs point to increased construction activity and costs. However, supply issues in all facets of construction – building lots, labor and materials – are affecting these activities.
As a result, construction costs are rising. Material cost increases are the highest they have been in six years, and labor is more difficult to find. It was challenging to secure labor and materials before the hurricanes and wildfires in 2017, and now the repairs and rebuilding efforts are putting even more stress on construction costs, according to published producer price index.