Material and Labor Costs Increase, but More Slowly than Last Quarter
by Verisk Property Estimating Solutions
Repair and remodeling costs continued to rise more rapidly than inflation, even as the Consumer Price Index rose by 2.7% year-over-year, according to the Bureau of Labor Statistics.
“The second quarter of 2025 might surprise people, as the tariffs executed by the Trump Administration had been expected to result in increased costs for property repair and remodeling,” said Greg Pyne, VP, Pricing for Verisk Property Estimating Solutions. “While costs did continue to rise, they rose at a slower rate than in the first quarter, falling almost in half from a 0.91% increase to this quarter’s 0.57%. So, the annual cost increase was 3.43% in Q2, compared to 3.97% in Q1.”
Quarterly price increases appear to be driven primarily by labor costs: the percentage of labor costs for repair and remodeling work rose modestly, from 63.80% to 63.82%. Further, the categories that had the highest price increases were also among those which were most labor intensive.
The Highest Annual Gains
Once again, the South Atlantic (4.12%), West North Central (3.65%), and Mountain (3.49%) states had the highest annual appreciation rates. On a quarter-over-quarter basis, the West South Central region had the highest cost increase at 0.78%, followed by the East North Central (0.70%), and Mountain states (0.67%). The South Atlantic states had a smaller quarterly increase at just 0.45%, reflecting the region’s recovery from the huge price spikes that affected the area following the devastating hurricanes that ravaged the region in 2024.
All regions once again experienced cost increases both quarterly and annually. Quarterly increases ranged from a low of 0.37% in New England to 0.78% in the West North Central region. The Middle Atlantic states had the lowest annual increase at 2.94%, just below the 2.95% increase in the West South-Central region. The rest of the regions were bunched between annual growth rates of 3.01% (New England) and 3.34% (East North Central).
“After spiking last quarter, prices in the Los Angeles wildfire areas are beginning to moderate,” Pyne added. “Los Angeles saw quarterly prices rise by over 6% in Q1, but only by 0.47% in Q2, although its 10% annual increase is by far the highest in the Southern California region.”
The Highest Quarterly Increases
South Dakota costs rose by 1.77% in the second quarter of 2025, followed by Idaho at 1.26%, and Nevada at 1.01%. These were the only three states with a quarterly increase of at least one percent.
New Hampshire was the only state where costs declined from the first quarter, falling by just under one percent.
Other states with very low quarter-over-quarter cost increases included New Mexico (0.15%), Louisiana (0.21%), and Connecticut (0.25%).
Verisk is a leading strategic data analytics and technology partner to the global insurance industry. For more information, please visit www.verisk.com or contact Rick Sharga, President & CEO, CJ Patrick Company, at [email protected]
