A 10-Year Surge in Residential & Commercial Reconstruction Costs

New England Sees Significant Increases in Reconstruction Costs, Led by New Hampshire and Maine

A new report from Verisk reveals sharp increases in both residential and commercial reconstruction costs across the U.S. over the past decade, with New England states experiencing some of the most significant shifts in the most recent year. The analysis, covering data from October 2014 to October 2024, highlights continued cost pressures from inflation, labor shortages, and supply chain disruptions, though projections for 2025 suggest a slowdown.

Residential Reconstruction Costs: New Hampshire Leads National Growth

Nationally, residential reconstruction costs have increased 63.7% over the past decade, with 4.2% growth between October 2023 and October 2024 alone. Every state saw an increase in residential reconstruction costs year-over-year, but New Hampshire led the country with a 7.66% increase, marking the largest cost growth nationwide.

Among other New England states:

Maine saw a notable increase, rising from 44th to 22nd in the national rankings, with a 4.17% cost increase over the past year.
Massachusetts, despite a 4.02% cost increase, fell in ranking from 9th to 24th.
Vermont, Rhode Island, and Connecticut followed the broader national trend of rising costs, though they were not among the top movers.

The accelerated growth in New Hampshire and Maine highlights regional cost pressures that could impact homeowners, insurers, and rebuilding efforts following catastrophic events.

Commercial Reconstruction Costs: New Hampshire and Maine Among Highest Increases

The surge in commercial reconstruction costs follows a similar trend to residential construction, with total costs rising 58.4% over the past decade and 5.6% from October 2023 to October 2024.

Once again, New Hampshire led the nation with the highest increase, up 11.92% in the past year—far exceeding the national average. Other notable trends in New England included:

Maine’s commercial reconstruction costs rose 5.80%, boosting its national ranking from 47th to 21st.
Rhode Island and Connecticut also saw steady increases, continuing a multi-year trend of rising costs across the region.

These rising commercial costs pose challenges for business property owners and insurers, as they contribute to higher claims payouts and premium adjustments in the New England market.

Lumber Costs and Inflation Drive Construction Cost Increases

Lumber prices have been a major driver of increased reconstruction costs, rising 43.8% nationally since October 2014. The past five years have seen a particularly sharp jump, with a near 40% increase from October 2019 to October 2024.

New England states, particularly New Hampshire and Maine, have felt the effects of these increases, with rising materials costs adding to overall reconstruction expenses.

Pandemic and Inflationary Pressures Linger

The Verisk report underscores the lasting impact of the COVID-19 pandemic on construction costs. Between March 2020 and May 2023, reconstruction costs surged over 25% for both residential (25.9%) and commercial (24.3%) properties.

While the post-pandemic price surge has slowed, inflation and labor shortages continue to put upward pressure on costs. From April 2023 to October 2024, reconstruction costs increased another 11.5% across both sectors.

“Rising reconstruction costs make it more expensive for insurers to pay property damage claims and can lead to increased policy premiums,” said Trish Hopkinson, head of 360Value at Verisk.

2025 Outlook: Slower Growth Expected

Despite the sharp increases in recent years, Verisk’s Market Expectations Index forecasts a return to pre-pandemic growth levels in 2025. From January to July 2025, reconstruction costs are projected to rise by:

2% for residential properties
2.2% for commercial properties

While this slowdown signals potential stabilization, New England states—especially New Hampshire and Maine—will likely continue facing cost pressures due to their above-average growth trends in both residential and commercial reconstruction costs.

As insurers reassess property valuations and pricing models, these cost increases will remain a key factor influencing policy rates, claims payouts, and the broader property insurance market in New England.