Construction cost increases across the country appear to be slowing.

New data released by Statistics Canada, for the second quarter of this year, show the cost of residential building construction rising by 0.8% and the costs of non-residential construction rising by 1.1%. Both costs rose by 1.0% in the first quarter of this year.

Year over year, construction costs for residential buildings in the 11-census metropolitan area (CMA) composite rose 4.2% in the second quarter, while non-residential building construction costs saw an increase of 4.3%. Calgary (+7.3%) led year-over-year growth in construction costs for residential buildings, while Saskatoon (+7.0%) led that for non-residential buildings.

Skilled labour shortages and the resulting increases in labour rates, interest rate pressure and building code updates were all reported as key factors impacting the construction sector in the second quarter.

The largest increases in residential construction costs reported in the Prairie provinces.

In the second quarter, residential building construction costs rose across all 11 CMAs. Calgary (+1.8%) and Saskatoon (+1.7%) experienced the largest quarterly increases, while Toronto (+0.2%) experienced the smallest increase.

In the 11-CMA composite, the costs to build a single-detached home, a townhouse and a low-rise apartment building all recorded a 0.9% increase in the second quarter, while the cost to construct a high-rise apartment (+0.6%) saw a slightly smaller increase.

All residential building construction divisions but one experienced an increase in the second quarter. Masonry (+2.4%) and utilities (+2.2%) led the increases, while structural steel (+0.1%), conveying equipment (+0.1%) and earthwork (+0.1%) had the lowest quarterly increases, and concrete (-0.1%) experienced a decline.

Meanwhile, the cost to construct non-residential buildings increased the most in Saskatoon (+2.1%) and Winnipeg (+1.3%) in the second quarter.

Of all non-residential buildings surveyed, the costs to build factories (+1.2%) and warehouses (+1.2%) saw the largest increases in the 11-CMA composite in the second quarter, followed closely by transportation buildings (+1.1%) and offices (+1.1%). Schools rose 0.8%.

Non-residential building construction costs increased across all divisions measured in the second quarter. Conveying equipment (+1.6%) and general requirements (+1.5%) reported the largest increases, while communications (+0.2%), structural steel (+0.6%) and masonry (+0.7%) had the lowest increases.