Building construction costs increased at their slowest quarterly rate in nearly four years in the third quarter of 2024.

Statistics Canada reports that residential building construction costs increased 0.9% in the third quarter, following a 1.0% increase in the previous quarter. Meanwhile, non-residential building construction costs rose 0.5% in the third quarter, following a 1.4% increase in the previous quarter.

The third-quarter numbers represent the slowest quarterly growth since the second quarter of 2020 for residential building construction costs and since the fourth quarter of the same year for non-residential building construction costs.

Year over year, construction costs for residential buildings rose 4.0% in the 15-census metropolitan area (CMA) composite in the third quarter of 2024, while non-residential building construction costs increased 3.9%.

Builders noted that the industry continued to face cost pressure from skilled labour shortages, land prices and availability, and building code changes.

Prairies record largest increases in residential construction costs

Calgary (+1.3%) recorded the largest quarterly increase in residential construction costs in the third quarter, followed by Winnipeg (+1.1%). London (+0.2%) experienced the lowest quarterly growth in residential construction costs, while costs were constant in St. John's.

At the 15-CMA composite level, the costs to build single-detached houses (+0.9%) and townhouses (+0.9%) saw the largest price increases of all residential buildings in scope of the survey.

At the division level for residential building construction, general requirements (+1.7%) and finishes (+1.4%) recorded the largest quarterly increases in the third quarter.

Decline in electrical division slows non-residential construction cost growth

Costs to construct non-residential buildings increased the most in Vancouver (+0.9%) in the third quarter, followed by London (+0.8%), Edmonton (+0.8%) and Calgary (+0.8%).

Of all non-residential buildings surveyed, the costs to build warehouses (+0.7%) and office buildings (+0.7%) rose the most in the 15-CMA composite in the third quarter, with shopping centres (+0.6%) experiencing a similar price increase.

Non-residential building construction costs increased across all but one division measured, with earthwork (+1.1%) and general requirements (+1.1%) divisions recording the largest increases, while the electrical division (-0.5%) experienced a cost decline.