Building materials, labor shortages and claim costs

Every homeowners claim for physical damage ends as a repair bill, and that bill is materials plus labor. Both have risen well beyond general inflation since early 2020, which pushes up what insurers pay on each claim, what they ask for in rate filings, and what a contractor's bid may be compared with the adjuster's estimate. The cost trend explains part of your premium. It also affects how much of your claim the first check covers.

Materials: what the federal price data show

The Bureau of Labor Statistics tracks producer prices for construction inputs. The Associated General Contractors of America (AGC) compiles the series in a table that was last updated September 10, 2026. Measured from February 2020 to August 2026, it shows:

Source: AGC table of BLS data, updated September 10, 2026. The figures are net changes. Lumber in particular spiked in 2021 and fell sharply in 2023, so the endpoint hides a rough ride in between.

The most recent readings still point up. The National Association of Home Builders reported that building materials excluding energy were up 5.1% in the year to August 2026 (NAHB, September 10, 2026). The AGC table also shows steel mill products up 23.4% in the latest twelve months, a period that includes the trade-policy changes covered in tariffs and home insurance costs.

The Triple-I summed up the combined result in its December 2025 market review: structural replacement costs rose nearly 30% over five years, driven by supply chain disruptions, higher material prices and workforce shortages (Triple-I, December 17, 2025). What that does to a dwelling limit is the subject of inflation, rebuilding costs and underinsurance.

Labor: the shortage behind the bids

Labor is usually the larger share of a repair, and it has its own pressures. The AGC and NCCER 2026 workforce survey, released September 3, 2026, drew 1,830 responses from contractors. Among the findings (AGC release.pdf)):

• 87% of firms had openings for hourly craft workers, and 88% of those said the jobs were as hard or harder to fill than a year earlier.
• Half said available candidates lacked the skills, certificates or licenses needed.
• About 29% reported at least one direct or indirect effect of immigration enforcement in the previous six months, from 17% in the Midwest to 42% in the South.
• 42% said worker shortages, their own or subcontractors', had delayed projects, the most commonly cited cause of delay.
• More than eight in ten firms raised base pay as much as or more than a year earlier.

This is a contractor survey, not a home-repair price index, so it measures the labor market rather than what a roofer or plumber charges. The BLS employment cost index in the same AGC table puts construction wages and salaries up 3.5% in the latest year and about 25% since mid-2020. Wages are not the same as the rates a contractor bills, which also carry overhead, insurance and profit.

How it reaches your claim

The estimate. An insurer's adjuster usually builds a repair estimate with software such as xactimate, which draws on regional price lists. According to the consumer group United Policyholders, most regions get a fresh price list every month, and the estimate is only as accurate as the local labor and material inputs the adjuster uses (United Policyholders). The publisher, Xactware, says it monitors market data, and users can override line items. Critics, including policyholder advocates and some attorneys, counter that the lists lag after a disaster, when contractors price scarcity into bids, and that estimates usually come in below contractor bids. Both can be true in a given claim: a gap between the first estimate and your contractor's bid is common and is not by itself evidence of a lowball. xactimate, contractor bids and estimate disputes explains how to work through one.

The scope. Higher prices make scope disputes worth more. Whether a roof is repaired or replaced, whether siding must be matched, and whether code upgrades are paid (ordinance or law coverage: paying to rebuild to code) were expensive questions at 2019 prices and are costlier now.

The wait. If contractors are booked for months, repairs drag on. Under loss of use and additional living expenses, living expenses continue while the house is uninhabitable, so a labor shortage can lengthen the Coverage D bill, and the limit or time cap on that coverage becomes a real constraint.

The holdback. Under the standard ISO HO-3 form, building losses are first paid at actual cash value when replacement is not yet complete, and you can claim the rest if you notify the insurer within 180 days of the loss that you intend to repair or replace (HO 00 03 05 11; newer editions and your insurer's own form may differ). Costs that rise between the estimate and the invoice are where supplemental claims come from; see supplemental claims and reopening a closed claim.

A hypothetical to see the blend

Say a roof replacement cost $12,000 in early 2020, split 40% materials and 60% labor (an invented split). If the materials rose 52.3%, as asphalt roofing products did, and the labor portion rose 25%, the same roof costs about $16,300 now, up roughly 36%. Materials alone moved more than the blended cost, but labor's weight kept the total from rising as fast as the material line. A real job's split and local prices will differ.

How it reaches your premium

Insurers project claim costs forward when they file rates. Higher loss trends, meaning faster-rising cost per claim, are a standard part of the filing, and regulators review the assumption. In practice, a 48% rise in the price of residential repair inputs has to be recovered somewhere, either through rate increases or through underwriting changes such as higher deductibles, roof schedules or fewer policies in high-cost areas. Triple-I's tables of ISO data show average homeowners claim severity rising from $13,884 in 2019 to $20,062 in 2023 (Triple-I). why homeowners insurance keeps going up puts this alongside catastrophe losses and reinsurance.

Roofs are the clearest case. Asphalt roofing products have risen about half since 2020, and roof claims are among the costliest hail and wind losses. Many insurers now settle roofs on actual-cash-value or age-based schedules; see Roof payment schedules and ACV roof endorsements.

What to do with this

1. Get two or three local bids before agreeing to a scope. Bids from licensed contractors show whether the adjuster's estimate is in line with local prices.
2. Ask which price list and date the estimate uses. Estimates carry a price list identifier and date. If prices have moved since, say so in writing.
3. Keep invoices. Recoverable depreciation and supplements both depend on actual costs; see recoverable depreciation: getting the rest of your claim.
4. Submit supplements as the job develops. Hidden damage and price changes are normal on a repair, and the sooner they are documented the easier they are to pay.
5. Check your dwelling limit and deductible against current prices. A limit set before 2022 may be short. The home replacement cost estimator is a starting point, and the roof claim payout estimator shows how roof schedules affect a payout.
6. Ask about extended replacement cost. A cushion above the limit absorbs some of a post-disaster price spike; see extended and guaranteed replacement cost coverage.

Key takeaways

• BLS data compiled by AGC show inputs to residential repair up 47.8% since February 2020, against 29.1% for consumer prices overall, with asphalt roofing products up 52.3% and steel mill products up 103.4%.
• The 2026 AGC and NCCER survey found craft jobs hard to fill at most firms and worker shortages the most common cause of project delays, so repair time and cost stay elevated.
• Higher repair costs raise average claim severity, which insurers recover through rate filings and underwriting changes.
• A difference between the adjuster's estimate and your contractor's bid is normal; document it with local bids and the price list date, and use supplements as costs become clear.
• Dwelling limits, deductibles and roof terms set before 2022 are worth checking against current costs.