A sharp increase in lumber prices at the end of the third quarter more than compensated for a collapse in the price of fabricated structural steel, boosting ENR’s indexes to their largest year-end increase since 1996. ENR’s Construction Cost Index ended the year with a 3.3% increase, just 0.2% shy of what was projected a year ago. The Building Cost Index increased 3.2% this year, 0.9% higher than ENR predicted. By December of next year, ENR forecasts a 3.4% increase in the CCI and a 3.0% increase in the BCI.

This year, both indexes were powered by relatively large wage increases. But the BCI received an extra kick from an 8.4% jump in lumber prices, which lifted the materials component of the index 1% above 2002’s level. This reversed annual declines for the MCI of 3.2, 3.3 and 3.0% during the three previous years.