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Dive brief:
- Non-residential construction input costs ended 2025 up 3.2% year-on-year, largely due to tariff-related impacts. For overall construction, which includes residential construction, costs rose 2.8 percent, according to a Builders and Contractors Association analysis of producer price index figures from the US Bureau of Labor Statistics.
- For December, Construction input prices fell 0.6% month on month to the end of the year, while non-residential costs were 0.7% lower. But these declines could not offset the annual jump.
- Prices of the most tariff-exposed materials, including copper wire and cable, rose 22% year-on-year and look set to continue rising in 2026 as “key inputs are still experiencing a rapid escalation,” said Anirban Basu, ABC’s chief economist.
Diving knowledge:
For commodities less exposed to tariffs, such as asphalt or crushed stone, the index should be around the same level in the coming months, Basu said.
This is probably due to the set soft demand for construction services outside the booming data center sector.
But the expectation of more price jumps this year It has yet to dampen contractor optimism, Basu said. About seven in 10 ABC members expect profit margins to remain flat or grow over the next two quarters, he said.
Despite this optimistic note, tariff impact on material costs have begun to make their way into the data, and economists don’t think it will stop anytime soon, according to the Associated General Contractors of America.
“Although these indices are based on selling prices of domestic producers, it is clear that high tariffs on imported metals and products are allowing US sellers to raise the costs of construction materials and equipment,” said Ken Simonson, AGC’s chief economist. “Construction costs are certain to rise further in 2026 as long as current rates are maintained.”
The producer price index for aluminum mill forms rose 30.5% from December 2024 to December 2025, the largest year-over-year increase since supply chain disruptions in early 2022. Simonson added that the index has accelerated each month since President Donald Trump imposed a Tariff of 50% on aluminium last june
The index for steel products, which are also under a 50% tariff, rose 17% for all of 2025. This is the material’s steepest increase since 2022, according to the AGC statement.
“These higher prices also show up in the cost of construction equipment and machinery,” Simonson said. “This index increased by 5.6% in the last 12 months, the most in two years.”
Simonson added that the cost of copper is sure to “go up even more this year if tariffs stay.”
