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That's dominated by the scarcity value of the land, not the value of the labor required to repair or replace the building on it. The "inflation" we should worry about here is contractor salaries and the cost of building materials. CPI seems fair to me.

labor increases for houses when the value goes up like this...

Not by 1000%.

No inflation metric is going to be perfect here, but CPI seems not unreasonable to me: disaster cost factor includes rebuilding costs, i.e. materials and labor pricing, not speculative real estate value.

In other words: the "real" cost is probably somewhere between the CPI-adjusted figure and the inflation-adjusted real estate speculative gains. But either way, the trendline is the same.

The value of that house has actually increased though as well as the cost of rebuilding it, even after adjusting for inflation.