Supply chain issues and employment costs are pushing construction costs higher in New York City than in other U.S. markets, according to a new report from construction consultant Rider Levett Bucknall.

NYC has seen an 8% increase in construction costs compared to a year ago, according to Commercial Observer, which first reported the RLB study. Across the five boroughs, total construction costs grew by 2.7% over the past quarter, faster than the 2.4% national average.

New York wasn't the city experiencing the fastest rise in construction costs over the past year: Boston costs are up by almost 9%, Chicago's are up 9% and Seattle's increased by 11%. Nationally, the average increase in construction cost was 7.5%.

Project costs are increasing due to a confluence of factors. Diesel prices are up 80% from a year ago, according to RLB’s report, and builders still face shortages of specific items such as kitchen appliances and HVAC equipment.

Nearly three-quarters of companies also told RLB that projects dragged on for longer than anticipated, a factor that often adds to labor costs for construction projects.

Finding enough labor is also driving costs up for the industry: only 455,000 of the 494,000 construction jobs posted in April were filled, according to the report.

“The biggest strain on the construction industry is labor shortage,” RLB Associate Principal Paraic Morrissey told CO. “Construction hiring was up 14%, but the amount of construction jobs posted was up 49%.”

Meanwhile, filings for new construction permits fell in Q2, according to figures released by the Real Estate Board of New York Thursday in its quarterly report on the city’s construction pipeline. Q2 saw 422 new building filings — an increase of 19% from a year earlier, but a 39% decrease from Q1 2022.

The total proposed construction square footage in NYC was 36% lower than Q1 at 15M SF and featured only 11 filings larger than 300K SF, compared to 16 in the previous quarter.

The dip in permits was expected after Q1 2022 saw the most filings of any quarter since Q4 2014, according to REBNY. Developers raced to start construction on apartment projects before the expiration of the Affordable New York tax break.