Construction Market Trends
Stay up to date on the dynamics of the construction industry with Skanska USA Building’s Construction Market Trends Report. Explore regional construction escalation insights and forecasts, supply chain lead times, material pricing and critical market indices through this interactive report.
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Spring 2025
As tariffs move from campaign promises to reality, all industries are bracing for their impact. While tariffs may lead to the formation of improved trade agreements between countries, in the near term, we expect that they will further drive up the cost of construction projects. Tariff rates on thousands of imported products are being published and will be in effect immediately. We expect these same countries will impose similar tariffs on the U.S. Planning for the impact of tariffs: While tariff impacts will be project-specific and could change depending on tariff timelines and percentages, we can make some assumptions. Materials costs on a typical construction project can range from 40–60 percent of total direct costs. US manufacturers could likely meet 75 percent or more of these material needs. For the remaining imported materials, a 30-percent tariff average could drive direct costs up by 5–10 percent, several million dollars depending on the project. How to prepare: • Continually evaluate published tariff rates for construction products and compare those to project specifications. • Work with manufacturers to determine material sources that could avoid tariff impacts through domestic sourcing or countries not subject to tariffs. • Monitor developments in tariffs and trade negotiations. Projects in early planning stages may see new trade agreements in place by the time they move into procurement. Planning for the impact of mass deportation: One of the largest looming impacts to the construction industry will be how the new administration enacts its promise of mass deportation of immigrants that lack permanent legal status. It is estimated that 15–23 percent of the U.S. construction workforce of 1.54 million people could fall in that category. Our industry already has an estimated labor shortfall of approximately 450,000 workers, so as deportations cause this workforce to shrink further, expect competition for skilled workers to drive labor cost escalation and negative impacts to schedules. How to prepare: • To mitigate risks, project teams should anticipate schedule impacts from limited labor availability and build room for delays as scheduling permits during project planning. • Build contingencies where possible into project budgets to allow for increased labor costs. How will the fires in the Los Angeles region impact our industry? The Los Angeles wildfires have destroyed more than 12,000 homes, numerous other structures and caused significant damage to infrastructure. The community impact is devastating, and early damage assessments are valued at $150 billion. While it’s too early to predict if we will see industry-wide impacts from these fires, we can examine data to contextualize them. By comparison, it is estimated that more than 100,000 homes were destroyed in 2024 by Hurricane Helene, and we have not yet seen national supply chain impacts from that disaster. It is likely that the effects of the LA fires on our industry will similarly remain regional, with the timber market being especially impacted. How to prepare: • Pay attention to your regional market to understand potential supply chain impacts on your projects.
What to expect if:
Consider alternative manufacturers
For prospective projects, evaluate your local market conditions to understand potential shifts that could yield improved budgets.
Understand the constraints of the local utility company
Fluctuating Tariff Policies and Federal Spending Reductions Impacting Construction Markets
Continue to evaluate the major power equipment
With the volatility of the MEP trades, consider alternative procurement approaches such as design-build or design-assist, where possible, with qualified MEP contractors. In traditional procurement models, interview local and regional MEP trade subcontractors early to presell your project and develop a purchasing plan that reflects the input of these key trades.
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Steve Stouthamer
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Consider alternative manufacturers or temporary solutions for power needs to abate lead time issues.
What to watch:
Federal Reserve meeting in December and subsequent adjustments to interest rates. Continued reductions will improve investor confidence in construction development but could begin to tip the economy back towards inflation.
Federal Reserve decisions on interest rates at their September meeting. While many are predicting a rate reduction in September, the Fed may elect to sit tight despite recession concerns as inflation levels remain high.
ILA negotiations to avoid a major supply disruption with a deadline of January 15, 2025.
There remains a significant need to grow the construction workforce. Some would argue that construction unemployment at 3.9 percent is essentially full employment and that wage levels need to continue growing to attract the workforce. As craft labor agreements renew, we could see wages increase at a pace higher than normal.
Impacts from policy changes as a result of the newly elected governments at the federal, state and local levels.
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Winter 2025
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Market Trends Report
Escalation Forecasts
Our Strategic Supply Chain Team maintains relationships with manufacturers and is closely monitoring the impact of tariffs on the supply chain.
Tariffs
In it’s first 4 months, the Trump administration has enacted, increased, reduced, paused and maintained tariff duties on imports from many foreign countries, provoking retaliatory tariffs on the United States. During this same period, the federal government has attempted to reduce federal spending by downsizing or eliminating various agencies and pulling back investments in certain sectors. Conversely, they have prioritized investments that would bring high tech and other manufacturing back to the U.S. All of these policy changes have created turbulent financial markets and uncertainty surrounding new construction projects.
While the U.S. engages with countries to work on improved trade agreements, the following tariffs remain in effect: The U.S., Mexico, Canada trade agreement (USMCA) from the first Trump administration remains in effect, exempting many products traded between the three countries, including many construction products, from further tariffs. In our March webinar, we projected that tariffs at the time could increase commercial construction project costs by +/- 5 percent. With early April’s tariff escalations, we felt that range could potentially double, but fortunately many of those higher tariff ranges have been paused to potentially allow for trade negotiations to continue. The cost of construction rose considerably post-pandemic, and additional tariffs would only challenge budgets further. These pressures could reduce construction spending, partially offsetting increased costs but also creating employment and recessionary concerns. As we monitor further tariff policy changes and shifts and reductions in federal investment spending, below are some potential risk mitigation strategies.
The USMCA is very important considering the volume of construction materials that pass between the three countries. We urge suppliers to continue to seek inclusion of products not currently covered by the agreement to mitigate tariff duties. Be flexible with the specification of construction materials for projects. It may be possible to onshore the same or comparable products that are not currently subject to tariffs. Monitor developments in tariffs and trade negotiations. As we do with our Strategic Supply Chain Team, go deeper into your supply chains to understand what manufacturers are doing to mitigate tariff risks. Partner with manufacturers who have been able to pivot and deliver in the most economical manner.
Contact us for more detailed, up-to-date information
Our Strategic Supply Chain team and our guests from Steel and Aluminum industries will be covering the impacts of tariffs on our upcoming Webinar. Register here
Keep scrolling to read our full analysis on the impending impacts
How to prepare:
Tariffs, Immigration and California Wildfires Create Concern in 2025
Analysis
Local Forecast
Spring Market Trends Report published: May 13, 2025
25%
30%
10%
tariff on all steel and aluminum, as well as their derivative products
tariff on all Chinese imports (down from 145% based on 90 day pause as of 5/12/25)
universal tariff on all foreign imports
Current Tariffs Implemented by the U.S.
Canada
Total: 25%
Steel
Aluminum
Lumber
USMCA
Reciprocal
14.5%
—
Other
Mexico
China
All Goods
145% 30%
Current Tariffs Implemented by the U.S. Impacting the Construction Industry
Goods imported from Canada and Mexico may be eligible for tariff exemptions IF they are USMCA compliant.
In order to qualify for USMCA exemption, goods need to meet the rules of origin and must be properly documented, including certification of origin. If the steel or aluminum is documented to have been “smelted and cast” in the U.S., that material is exempt from the tariff.
How do “derivative” tariffs work?
Goods containing steel or aluminum will be tariffed on the value of the metals contained in the good (the entire value of the good will not be tariffed, just the metals content).
Proper documentation of tariffs: If suppliers or trade partners are seeking reimbursement of tariffs on to a construction project, ask for documentation of the tariffs charged. This documentation is critical in differentiating newly implemented tariffs from long-standing tariffs that should already have been factored into a bid.
A great example of this is an “Entry Summary.” This document, provided by U.S. Customs and Border Protection, will list each individual tariff/duty that was applied to the material.
tariff on all Canadian lumber
All Goods are down from 145% to 30% based on a 90 day pause as of 5/12/25
Spring 2025 Supply Chain
Source: U.S. Energy Information Administration, April 2025
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics and Producer Price Index, Drywall data as of April 2025, Gypsum data as of March 2025
Source: Steel Benchmarker, April 2025
Source: U.S. Bureau of Labor and Statistics Producer Price Index, May 2025
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index, April 2025
Generators
HVAC Equipment
Electrical Gear
Fuels and Natural Gas
Piping
Structural Steel Inputs
Electrical Commodity Materials
Concrete and Cement
Drywall and Gypsum
Lumber and Wood
Metals
Status Key
Trending Up Significantly
Trending Up
Fluctuating
Trending Down
Stable/Consistent
- Overall, metals pricing is up from mid-year. - However, the rally caused by China’s stimulus program at the end of September proved to be short-lived, and pricing has since settled down.
Source: Kitco All data as of October 2024
Material
Ceilings, drywall, metal studs, flooring, paint, etc.
Current Status:
Lead Time
6-12 Month Forecast:
Price
Three-quarters of the cement used in the U.S. is produced domestically. Tariff impacts in this category should be minor, especially if imports are USMCA compliant. We are forecasting an uptick in cement/ready-mix pricing.
No further price increases were announced by major drywall producers after the previously reported increases in the January/February timeframe. Pricing going forward will largely depend on the state of tariffs with Canada and Mexico (and USMCA compliance).
Lumber futures hit a 2.5-year high in March, then retreated to levels seen at the start of the year. Current tariffs on Canadian softwood lumber stand at 14.5 percent but could increase later this year after the completion of an anti-dumping study ordered by the current U.S. administration.
Concerns about global economic growth have caused prices for nickel, copper and aluminum to soften. Demand has decreased, creating a supply surplus. Tariffs concerns continue to impact the pricing of commodities as well.
Source: Kitco, April 2025
Economic concerns and weaker demand, coupled with OPEC announcing increased oil production, have led to lower costs for gasoline and other fuels. Natural gas pricing tends to trend lower in the warmer seasons, which is consistent with these recent changes.
PVC: PVC pipe demand remains down, and prices remain stable. PVC demand is tied more closely to residential construction which has been impacted by higher interest rates. Copper: Copper pipe prices increased as raw copper prices trended upward. Ductile Iron Pipe: Prices are fluctuating in a tight range but remain stable overall.
Structural steel pricing continues to move upward. Since the start of the year, wide flange pricing is up nearly 5 percent. Wide flange is typically the major cost driver of a fabricated steel package. Plate is up 32 percent and HSS is up 57 percent.
Structural Steel
Lead times for electrical gear remain elevated for switchgear, switchboards, ATS and liquid-filled, pad-mounted transformers. Lead times on specific equipment can vary greatly depending on the manufacturer. Prices continued to increase at least 15–20 percent in 2025, primarily due to strong demand and tariffs.
Source: FRED, April 2025
Demand for data center gensets (>2750MW) remains very strong. Lead times range from 58–130+ weeks, depending on the manufacturer, with some bookings pushing out to Q3 of 2027. Lead times for 1MW to 2.7MW gensets range from 34–96 weeks; 250kw to 1MW are 32–45 weeks; below 350kW range from 18–30 weeks. Again, actual lead times vary depending on the manufacturer and specifications. Prices are expected to increase 10–15 percent in 2025.
Lead times for HVAC equipment have been stable for most equipment categories. Prices increases in 2025 are expected to be in the range of 10–15 percent depending on the manufacturer, primarily due to tariffs and strong demand.
Insulation
Consistent with similar price increases announced in January for other types of insulation, an 8-percent increase has been announced for mineral wool insulation. This is set to go into effect on July 7.
Source: U.S. Bureau of Labor and Statistics, April 2025
Supply Chain Analysis
As we move into the second quarter of 2025, the most pressing supply chain challenge that has emerged is uncertainty as to what the tariff and global trade landscape will look like long-term. This presents both strategic and tactical challenges for manufacturers. For example, if the reciprocal tariffs announced by the current administration (then paused for 90 days) go into effect and remain long-term, it may make sense to invest in relocating manufacturing to the U.S. However, the uncertainty created by the on-again/off-again implementation of the administration’s tariff policies prevents the development of a clear business case for that domestic investment. This uncertainty is even affecting near-term tactical decisions, like how far ahead manufacturers and suppliers should buy and store materials, and what level of finished goods inventory they should maintain. Many manufacturers have made near-term tweaks to their supply chains to mitigate some risks, but we are still seeing rising prices for imported and domestically produced goods. Looking Ahead The volume of container shipments from China to the U.S. has decreased by 40 percent or more. Retailers like Walmart and Target are stating that their shelves will start to empty out in mid-May. Although we have not yet heard similar concerns from manufacturers of construction materials, we will continue to monitor this situation.
Greatest threats to supply chain stability:
HVAC equipment, electrical gear, steel, elevators and curtain wall will be impacted by the 10-percent tariff on all Chinese goods, as well as the 25-percent tariff on all imported aluminum and steel. Additional categories, such as finished goods, lumber, drywall, fixtures, and other material, may be affected by potential duties in March.
Immigration
Labor markets in the U.S. remain tight given the low unemployment rate. Slowing immigration and increased deportation of undocumented workers may exacerbate the construction and manufacturing labor markets.
Recent disasters, including Hurricane Helene in the Southeast and the wildfires in Southern California, will likely have significant impacts to their regional construction supply chain.
There remains uncertainty around the wars in Ukraine and the Middle East, as well as the potential for further conflict related to Taiwan and North Korea.
Our Strategic Supply Chain Team is closely monitoring the impact of weather related disasters and geopolitical events on the supply chain.
Winter 2025 Supply Chain
Source: Steel Benchmarker All data as of January 2025
Source: U.S. Bureau of Labor and Statistics Producer Price Index All data as of December 2024
Source: U.S. Energy Information Administration All data as of January 2025
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index Plywood and 2x4 S4S data as of January 2025 Lumber and Plywoo4d data as of January 2025
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics data as of January 2025 and Producer Price Index data as of January 2025 Drywall data as of January 2025, Gypsum data as of January 2025
2MW+
A Challenging Time for Clarity
Spring 2025 Indices
Materials and Commodities
Drywall, Gypsum and Insulation
Construction Cost Indices
Spending
Building Cost Index
Materials Index
U.S. Employment
Labor
Architecture
Unemployment
Click an index or material to view details
Winter 2025 Construction Pricing Snapshot
The ENR Materials Index continues to cool from the significant year-over-year inflation experienced in 2021 and 2022. Like the BCI and CCI, the Materials Index doesn’t include mechanical and electrical equipment cost impacts, which have driven project costs higher than traditional measures of construction inflation. With the large volume of high-tech work and expanding electrification efforts in service of decarbonization, such equipment costs will remain high.
Source: Engineering News-Record Data as of November 2024
Use this slider to modify the timeframe of the data shown on the graph. Click on the graph for specific pricing data points.
Source: U.S. Bureau of Labor Statistics All data as of October 2024
Hover over the chart to see exact figures
The unemployment rate sits at 4.1 percent as of October 2024, down from a high of 4.3 in July 2024. Total nonfarm payroll employment experienced a slowdown in growth in October with only 12,000 additional jobs added. This is attributed to the decrease in manufacturing employment due to labor strikes and offsetting growth in healthcare jobs. Construction only had a minor increase of 8,000 jobs from September to October, keeping the unemployment rate steady.
U.S. Unemployment
For the past 12 months, both of ENR’s core construction indices have remained below the 3–3.5 percent historical, annualized escalation trend. However, it’s important to remember that regional locations are experiencing inflation differently based on work volume. MEP system costs, which are not incorporated in the ENR indices, continue to escalate more rapidly than other building systems.
Source: U.S. Census Bureau and Dodge Data & Analytics Construction spending data for September 2024 and Dodge Momentum data is from September 2024
While the Dodge Momentum Index decreased 4.2 percent from August to September, the index remains at “very robust levels,” up 21 percent from September 2023. In September 2024 alone, 28 projects valued at $100 million or more entered the planning stage. Per Sarah Martin, associate director of forecasting at Dodge Construction Network, “A surge in data center activity drove much of the recent rapid growth in the DMI...By mid-2025, the Fed’s rate cuts should spur planning projects to reach groundbreaking more quickly.”
Construction Spending and Dodge Momentum Index
Might Change
Source: Engineering News-Record All data as of November 2024
Skilled Labor Index and Common Labor Index
ENR's craft labor indices have had year-over-year increases under 1.8 percent. The 10-year average annual increases for these indices are in the 2–2.5 percent range. However, because they do not factor in mechanical and electrical (M/E) crafts, these indices can be misleading and may underestimate labor cost escalation. A similar 10-year trend for M/E labor has shown a 4.2 percent increase per year. Given the mix of trades on construction projects, we estimate that the annual craft labor increase for the past 12 months is in the 2.5–3 percent range.
Skilled Labor and Common Labor Indices
Source: AIA, All data as of September 2024
The Architecture Billings Index remains below 50, as the majority of firms continue to report a decline in billings. Conditions remain soft in all regions of the U.S., with firms in the South reporting the strongest ABI at 49.5. However, the pace of decline seems to have subsided, and conditions may turn positive soon given the lowering of interest rates by the Fed in September.
September ABI Report
Architecture Billings Index
This Architecture Billings Index (ABI) demonstrates whether or not architectural firms are billing for or signing new design contracts. The construction industry feels the impact of this index with a 9-to-12-month lag time.
Scoring
-50: decrease in volume =50: neutral 50+: increase in volume
The drop in prices over the past 60 days is driven in part by sluggish demand for gas as the busy summer traveling season has given way to an autumn slowdown. Meanwhile, a sharp decline in the price of crude oil has propelled a larger drop-off in gas prices than is typically seen at this time of year.
Source: U.S. Energy Information Administration All data as of October 2024
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics data as of October 2024 and Producer Price Index data as of September 2024 Drywall and Insulation data as of October 2024, Gypsum data as of October 2024
Drywall availability and pricing are stable. Insulation prices are stable in the short term but an increase in new home sales could apply upward pressure. Lead times for mineral wool insulation remain elevated but have receded slightly from 30 weeks down to 20 weeks.
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index Concrete Block and Precast Concrete data as of September 2024 4000 PSI data as of September 2024
Concrete pricing continues to rise but at a slower pace than 2023. Quarter to quarter, 4000 PSI concrete pricing is up just 0.6 percent.
Source: Steel Benchmarker All data as of October 2024
Structural steel pricing fluctuates from week to week, but the overall trend since the start of 2024 has been downward. Plate steel, the most significant component in building structural steel, has been a key reason for lower fabricated steel pricing.
PVC: PVC pipe prices are down due to low residential demand and a solid supply of resin. Copper: Raw copper prices have been volatile. However, pipe costs have remained relatively flat since last quarter. Ductile Iron Pipe: Prices have been relatively stable over the last six months due to flat demand.
Source: U.S. Bureau of Labor and Statistics Producer Price Index All data as of September 2024
Lumber pricing continues to be soft due to weak demand. Housing starts remain low at 1.35 million for the month of September, down from 1.36 million in August.
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index Plywood and 2x4 S4S data as of October 2024 Lumber and Plywoo4d data as of October 2024
Overall, metals pricing is up from mid-year. However, the rally caused by China’s stimulus program at the end of September proved to be short-lived, and pricing has since settled down.
Dodge Starts and Momentum Index
Architectural Billings Index
Employment Rates
Construction Cost Index
Composite Construction Cost Index
Construction Spending
Index
The four quarters reported by ENR in 2024 had an annual escalation rate under 2 percent. From February to May 2025, the Building Cost Index jumped 1 percent for an annualized increase of 4 percent. We feel that is being influenced by tariff pressures. It’s worth remembering that ENR’s BC and CC indices do not include MEP trades, which is why we have built our Composite Cost Index.
Source: ENR, May 2025
MEP costs make up a significant portion of total construction costs. Using our Skanska in-house MEP expertise, we have forecasted the pace of MEP price inflation and blended this with the ENR (architectural/structural trades) index. While each region will feel the pace of escalation differently given local volumes, our escalation forecasts on individual projects are likely more aligned with the composite index.
Source: Engineering News-Record and Skanska, May 2025
The ENR Materials Index remains nearly flat. Like the BC and CC indices, we have noted that the ENR indices do not include mechanical and electrical material, which has escalated at a more significant pace. We expect tariff assessments to put upward pressure on material costs, and the April to May uptick could be indicative of more escalation in the months ahead.
Source: Engineering News-Record, May 2025
The Dodge Momentum Index (DMI) declined by 6.9 percent from February to March. Similar to the Construction Starts Index, results are mixed by sector. Dodge noted weaker planning activity for warehouses, data centers and retail stores but strong activity for hotels and offices. Data centers in particular have an outsized influence on the DMI—if all data center projects were removed, the DMI would be up by 12 percent in March.
Source: Dodge Data & Analytics, May 2025
Total construction starts are up 3 percent in March 2025 to a seasonally adjusted annual rate of $1.1 trillion. However, on a year-to-date basis, starts are down 1 percent from last year. Nonresidential building starts improved 6 percent in March but are down 9 percent on a year-to-date basis. “Construction activity grew over the month, but sector-specific data continued to show mixed trends,” stated Eric Gaus, chief economist at Dodge Construction Network.
Source: U.S. Census Bureau, April 2025
The Architecture Billings Index (ABI) continues to dip in 2025 and now sits at 44.1 as of March. The ABI has declined 27 of the last 30 months, and that softness is likely to continue. Per the ABI, “clients are increasingly nervous about the uncertain economic outlook, and many remain wary of starting new projects at this time. However, backlogs at architecture firms remain reasonably healthy at 6.5 months, on average, which means that even though little new work is coming in currently, they still have a decent amount in the pipeline."
Architectural Billing Index
Construction unemployment stands at 5.6 percent in April 2025, a decrease from February’s high of 7.2 percent but slightly elevated from last April’s 5.2 percent. The national unemployment rate remains at 4.2 percent as of April 2025. Total nonfarm payroll employment increased by 177,000 in April, beating experts’ estimates. Employment continued to trend up in healthcare, transportation and warehousing, financial activities, and social assistance. Federal government employment experienced the biggest decline, losing 9,000 jobs in April and 26,000 since January.
Source: U.S. Bureau of Labor Statistics, April 2025
Employment
Dodge Momentum Index
Construction Starts Index
ENR Construction Cost Index
Winter 2025 Indices
Source: AIA, March 2025
March ABI Report
Discover more
Forecasting Local 2025 Construction Costs
This map reflects local USA Building Project Planning Services team leaders’ opinions of market volume and capacity and is not based on published analytics or third-party forecasts.
Click the map pins to see forecast details for a specific city or region.
Miami/Ft. Lauderdale
Seattle
Portland
Orlando
Tampa
New Jersey
New York
Boston
Connecticut
Phoenix
Philadelphia
Washington D.C.
North Carolina/ Virginia
Cincinnati
Atlanta
Nashville
Houston
Dallas
San Antonio
Los Angeles
San Francisco
Boston/New England
Federal NIH funding changes are impacting local universities and healthcare institutions that rely on funding for research each year. The proposed funding reductions, combined with the uncertainty around tariffs, have many owners slowing down the design and construction process, and we anticipate fewer starts to occur this year. High vacancy rates for lab and office space and recent sales below market value are restraining new starts in commercial development. Infrastructure and aviation continue to show strong growth, and new project starts are continuing to outpace other market segments. The impact of NIH funding and tariff uncertainty will keep new construction starts lower and limit university work over the next few months. Tariffs and heavy construction activity in housing, aviation and infrastructure are providing upward pressure on pricing, which is offsetting downward pressure from the reduction in federal NIH funding, high commercial vacancy rates and low property values.
Want to discuss the local market position and forecast? Connect with Matt Impastato, Vice President of Preconstruction, Boston.
Market Uncertainty Impacts Higher Education, Life Science and Healthcare Sectors
Back to map
Miami/ Ft. Lauderdale
N. Carolina/ Virginia
Atlanta, GA
Mission Critical and Technology Projects: The surge in these projects is driving significant growth and demand for skilled labor and subcontractors, offering substantial opportunities for firms specializing in high-tech and mission critical infrastructure. Higher Education and K-12 Construction: Supported by the governor’s comprehensive education enhancement plan, this sector is expected to see steady construction activity through 2025. Infrastructure Spending: New federal policies, including increased infrastructure spending and reduced regulations, could lead to new opportunities for construction firms, although the uncertainty of federal funding remains a challenge. Industrial Real Estate: Demand for industrial space in Atlanta has improved, with leasing activity increasing by nearly 15 percent and annual net absorption nearly doubling from 2023. This sector is poised for growth.
Key Growth Opportunities in Mission Critical, Education and Infrastructure
Want to discuss the local market position and forecast? Connect with Dane Wooley, Preconstruction Director in Atlanta.
Cincinnati, OH
Local projects are starting to feel the price pressure from recently enacted tariffs, along with opportunistic price increases based on the threat of additional tariffs. However, very few projects have been paused or cancelled, and there is still a strong pipeline of projects locally across most major market sectors. The strength of the market will continue to drive wage inflation along with expected material price increases. Greater Cincinnati is seeing activity on both sides of the Ohio River, with the University of Cincinnati executing a multi-year transformation of their West Campus along with multiple housing projects to accommodate record enrollment. In Northern Kentucky, there is robust development along the Covington Riverfront as well as a multi-year modernization of the Cincinnati/Northern Kentucky International Airport (CVG). CVG is one of the fastest growing cargo airports in the world, and Amazon Air’s largest U.S. hub. It is developing 350 acres of airside real estate to accommodate this growth.
Project Starts Remain Strong Despite Tariff Price Pressures
Want to discuss the local market position and forecast? Connect with Jeff Smoker, Vice President of Preconstruction in Cincinnati.
Dallas, TX
The North Texas region continues to see growth across market sectors with projects such as GigaPop Data Center—a $1-billion, 800,000-SF data center focused on AI and cloud computing—and Terminal F at DFW International airport—a new 400,000-SF terminal with 15 gates, designed to accommodate the 100 million annual travelers anticipated by 2028. The uncertainty caused by tariffs and new immigration policies has caused a shift from rapid growth to a period of adjustment and stabilization. Steel and aluminum tariffs in particular have led to substantial increases in material costs, sometimes as high as 8 –10 percent. With immigrants comprising approximately 25 percent of the construction workforce, recent immigration enforcement and policy shifts have led to an even greater worker shortage in an already shrinking labor pool.
Shifting from Rapid Growth to a Period of Adjustment and Stabilization
Want to discuss the local market position and forecast? Connect with Linh Le, Vice President of Preconstruction in Texas.
Washington, D.C.
Proposed cost increases due to tariffs are causing cost uncertainty for some owners. This may cause some projects to be delayed. Downsizing and/or closing of some federal agencies and cancelling of federal leases has made an already tight DC commercial office market even tighter. High construction costs and elevated interest rates are causing multi-family investors to prioritize purchasing existing properties at heavily discounted rates over new construction. This will likely delay many multi-family starts even further. The K-12 market is still slow due to funding issues at the county level. The higher education market has a steady stream of opportunities.
Tariffs and Federal Government Downsizing Causing Uncertainty in Some DC Market Sectors
Want to discuss the local market position and forecast? Connect with Tom Strawbridge, Preconstruction Director in Washington, D.C.
Houston, TX
Healthcare continues to be a major source of construction activity in the Houston market, with the most recent driver being Huntsville Memorial Hospital, which passed a bond on a new $246-million hospital. In the higher education market, Texas A&M University continues to show growth with three new proposed projects: a $180-million business school, a $220-million biology building, and a $210-million visual arts building. City and county work, specifically for Harris County and the City of Houston, appears to be slowing down.
Experiencing a Mix of Growth and Challenge
Despite tariffs fueling recession concerns, there are still billions of dollars of planned development continuing in South Florida. Miami-Dade has just approved the $3-billion Little River District development that will bring workforce housing, residential, commercial and retail projects to the area. Several ‘Live Local Act’ projects have been announced in the Miami-Dade, Broward and Palm Beach tri-county area, and institutions like Vanderbilt University, Palm Beach Atlantic and the Cox Science Museum are planning major developments in West Palm Beach. The greatest impact from tariffs so far is the uncertainty they’ve caused. Trades that expect to be heavily impacted are maneuvering to secure local and/or tariff-friendly supply chains in an attempt to remain competitive. Some companies are also looking to diversify their portfolios in efforts to shore up backlog ahead of future uncertainty. When vetting potential subcontractors, be sure to validate their recent experience in the sector. While South Florida is known for its immigrant population, existing Florida immigration law means that recent changes to federal immigration policy have not seemed to have a major impact on our trade partners.
Strong Market in the Face of Tariff Uncertainty
Want to discuss the local market position and forecast? Connect with Walt Chislak, Preconstruction Manager in South Florida.
Nashville, TN
After a decade of rapid growth, the Tennessee market is showing signs of softening while strong fundamentals remain for future expansion. Q1 2025 began with economic turbulence primarily caused by tariff uncertainly and undergirded by stringent lending requirements in the capital markets. We anticipate a more cautious approach to capital projects in the near term, but much of this is dependent on where the owner, investor or developer is in the deal cycle. All eyes remain on the East Bank, a 550-acre area adjacent to the Cumberland River where the new $2.2-billion Tennessee Titans Football Stadium is under construction and represents the centerpiece of an area ripe for development over the next few decades. This large-scale, multi-phase buildout will continue to attract investment for the creation of a future mixed-use neighborhood to rival Nashville’s Central Business District. Additionally, Nashville passed a referendum to increase sales tax by a half-cent to fund a multi-year, $6-billion transit plan. The first phase is currently in design, and the projects are aimed at creating better, safer transportation across the city through initiatives like sidewalks, traffic signals and bus service improvements. This will create additional construction projects and real estate development opportunities around major city corridors.
Near-Term Market Softening and Optimism for Long-Term Growth
Want to discuss the local market position and forecast? Connect with Adam Hicks, Vice President of Preconstruction in Nashville.
North Carolina/Virginia
Despite prevailing tariff concerns, the construction market in North Carolina and Virginia has continued to exhibit resilience, particularly within the higher education, data center, pharmaceutical and manufacturing sectors. These sectors continue to drive substantial projects that occupy a significant portion of the region's MEP labor capacity, pushing escalation above normal levels in these trades. The wider subcontractor market faces its own challenges as it navigates tariff uncertainties, potentially leading to both actual and speculative cost increases that require careful monitoring. This environment is causing subcontractors to hesitate on bidding for projects that extend far into the future. Amidst these dynamics, the overall escalation in civil, structural and architectural trades is trending toward a more stable range, offering some predictability despite broader economic fluctuations.
Resilience Amidst Uncertainty
Want to discuss the local market position and forecast? Connect with Chris Littlefield, Vice President of Preconstruction in North Carolina and Virginia.
Tariffs are affecting material fabrication for existing construction projects and the negotiation of new contracts in New Jersey. Commercial real estate and construction have particularly decelerated due to rising costs for steel and aluminum. Additionally, the industry is facing challenges related to labor shortages and increased labor costs due to immigration policies. Infrastructure development, healthcare, and life sciences sectors continue to exhibit steady growth driven by economic demand. While wind energy remains a priority for New Jersey, the cancellation of the state's fourth offshore wind solicitation by the New Jersey Board of Public Utilities (NJBPU) signals a temporary slowdown in investment in sustainable infrastructure. Despite this, efforts to enhance transmission grids and identify new interconnection points continue, underscoring The Garden State's ongoing commitment to renewable energy.
Transportation and Healthcare Sectors Remain Undeterred by New Policies
Want to discuss the local market position and forecast? Connect with Nick Culver, Vice President of Preconstruction in New Jersey.
New York, NY
There has been significant client interest regarding the impact of tariffs on their respective projects. We have assured clients that we are closely monitoring these changes daily to navigate the market's current uncertainty. Despite these challenges, the healthcare sector continues to explore new projects in both New York City and Long Island. The life sciences industry also remains robust, with several upcoming projects anticipated. Infrastructure is stable and is projected to remain steady through the third quarter. While higher education has paused several projects, they are expected to resume by the third quarter.
The "Wait and See" Market has Sprung
Want to discuss the local market position and forecast? Connect with John Tamborino, Vice President of Preconstruction in New York.
Orlando, FL
The Central Florida construction market is undergoing a notable shift. The increase in trade partners willing to participate in bidding is a positive sign, especially after a period of limited coverage in various trades. The desire of these partners to maintain growth suggests confidence in future projects, even amidst challenges like skilled labor shortages. With fewer projects to bid on, it will be important to pay attention to how this dynamic affects pricing. While costs haven't necessarily decreased, the cooling pace of escalation could provide some relief to project budgets. It might also encourage more competitive bidding as trade partners seek to secure contracts. This evolving landscape could lead to new strategies for both contractors and trade partners, balancing the need for skilled labor with the realities of the current market.
Slight Market Cooling Results in Increased Trade Partner Participation
Want to discuss the local market position and forecast? Connect with Tom Stickrod, Vice President of Preconstruction in Orlando.
Philadelphia, PA
Tariffs and their impact on new projects in planning are the biggest items for this quarter's forecast. We are seeing cost impacts across the board as tariffs bring uncertainty to our region. Multiple projects have been put on pause in the hope that things will settle down in the near term. We have also seen an increase in more proactive clients wanting to get out in front of their competitor’s projects, preparing to quickly restart when some normalcy returns to the market. Many clients have requested we lock down pricing on multiple materials so that we can avoid tariff-related cost escalation. Involving our Strategic Supply Chain team and other national resources heavily in these discussions has helped ease some of our clients’ concerns. We are also experiencing subcontractor hesitancy in committing to projects with longer schedules. However, we are also seeing subcontractors bidding on work that they previously may not have in order to build their backlog in these uncertain times. Market sectors which continue to be very active in our region are healthcare, higher education and science and technology. We are continuing to see a large focus on MEP capital projects for equipment replacements for longstanding projects as part of many of our clients’ master plans.
Tackling Rising Costs of New Tariffs Head On
Want to discuss the local market position and forecast? Connect with James Lane, Vice President of Preconstruction in Philadelphia.
Phoenix, AZ
Phoenix remains the top industrial market in the U.S. Although semiconductor manufacturing is experiencing some fluctuation, recent announcements—including TSMC’s $100-billion commitment to its Arizona expansion, NATCAST’s third flagship facility being planned at the ASU Research Park, and Mayo Clinic’s $1.9-billion investment to expand their Phoenix campus—are promising developments for the local market. Semiconductor suppliers have been more cautious about starting construction, as CHIPS money is slowing. Data centers continue to drive growth in the region, with Phoenix ranked in Q1 as the fourth-largest data center market in the country. Additional projects are expected throughout the second half of the year and beyond. Labor availability continues to be stretched, though we have seen some softening with recent completion of a few megaprojects.
Spring Has Sprung, Though the Market Could be Greener
Want to discuss the local market position and forecast? Connect with Tom Feeney, Vice President of Preconstruction in Phoenix.
Portland, OR
Next month, a large bond will be voted on by the community in Portland to modernize the three remaining high schools. If passed, this will unlock $1.3 billion in funding for these projects. Healthcare project outlooks remain mixed, with uncertainties surrounding federal grants and funding related to research and development programs, resiliency and rural access. The project mix continues to be skewed toward public projects, and competition is high between general contractors and subcontractors on many projects. The early warning signs of a challenging market are present, however. There are only five tower cranes in the city and there are reports of high numbers of electricians in the union hall looking for work. The Architecture Billings Index for the West dropped over the last quarter—indicating fewer inquiries about future projects—and is currently the lowest in the country at 43. On a recent $35-million public works project, there were 14 general contractors who proposed, a remarkable increase over what we would have seen just one year ago.
Local Market Remains Resilient in the Face of Global Uncertainty
Want to discuss the local market position and forecast? Connect with Matt Richardson, Vice President of Preconstruction in Portland.
San Antonio, TX
Tariffs continue to be a significant issue, leading to ongoing changes and cost impacts across the industry. Although the San Antonio region hasn't seen any major project cancellations directly due to tariffs, the area remains vigilant and alert. Proactive procurement management is crucial to navigating this volatile market. The recent executive order eliminating the Project Labor Agreement (PLA) mandate is anticipated to positively impact the construction industry within the federal sector, which is crucial for the San Antonio region. San Antonio has seen substantial investment in manufacturing expansion over the past few years. With the administration's current efforts to bolster domestic manufacturing, San Antonio may experience direct benefits in the future. The current Texas State Legislative Session, which runs until early June, will impact both the higher education and K-12 sectors. While there's optimism about potential increased funding for Texas public higher education institutions, it's not a certainty. Additionally, Alamo Colleges has a $1-billion bond vote in May for projects targeting northern and rural areas currently underserved by the community college, which will create numerous project opportunities in the near term. is crucial for the San Antonio region. San Antonio has seen substantial investment in manufacturing expansion over the past few years. With the administration's current efforts to bolster domestic manufacturing, San Antonio may experience direct benefits in the future. The current Texas State Legislative Session, which runs until early June, will impact both the higher education and K-12 sectors. While there's optimism about potential increased funding for Texas public higher education institutions, it's not a certainty. Additionally, Alamo Colleges has a $1-billion bond vote in May for projects targeting northern and rural areas currently underserved by the community college, which will create numerous project opportunities in the near term.
The Only Constant is Change
Want to discuss the local market position and forecast? Connect with Chris Hillyer, Senior Vice President of Preconstruction in San Antonio.
San Francisco, CA
The Bay Area has substantial work planned in aviation, healthcare and life science. San Francisco's International Airport (SFO) continues work on its $5 billion, five-year renovation and expansion plan with West Field developments and renovation work. Sacramento International Airport (SMF) continues its $1.3 billion, four-year SMForward improvement plan. Healthcare remains steady in the Bay Area, with multiple new outpatient centers and ground-up acute care centers as providers work to meet the 2030 California Department of Health Care Access and Information (HCAI) structural performance requirements and community needs. While the technology market has slowed, significant research and development investments are on the horizon, with recent CHIPS funding. Life science companies are planning campus expansions in the coming years, and manufacturing facilities and data center investments are progressing, particularly in the growing Sacramento region. The education market is growing with a record number of bonds passed across the state in late 2024, including the California-wide $10 billion bond for K-12 and community colleges.
The Local Economy is Slowly Picking Up
Seattle, WA
Seattle opportunities remain limited across most market sectors. Material prices continue to escalate, further complicated by potential tariffs. Several projects in preconstruction or bidding are hesitant to start as a result of that uncertainty. The healthcare market remains slow, as few large projects are moving into design and bidding; King County’s new patient tower at Harborview is the only large project to hit the market recently. Residential rents are not keeping pace with the cost of construction and escalation, limiting new projects from breaking ground. Educational project opportunities remain strong, and bonds that were passed in the 2024 elections are keeping the K-12 market busy. Similarly, higher education remains consistent as universities look to update their buildings and get federal funding for decarbonization efforts. Operations and maintenance projects have been keeping the light industrial and manufacturing market busy as municipalities look to upgrade their facilities. Boeing similarly continues to upgrade their facilities to target more production ability. Mission critical projects remain active, but some are being tabled briefly for redesign to keep up with chip technology. Lastly, the population growth in Seattle continues to drive the need for transportation projects by WSDOT and Sound Transit light rail.
Adapting to a Competitive Market
Want to discuss the local market position and forecast? Connect with Dan Curtiss, Vice President of Preconstruction in Seattle.
Tampa, FL
With high population growth continuing, the Tampa Bay construction markets have not slowed. Despite this growth, overall costs, lead times and supply chains have stabilized. Additionally, trade participation in pricing is increasing. The higher education project pipeline seems to be stabilizing, but single and multifamily housing, healthcare, and K-12 projects show no signs of slowing and continue to put pressure on the existing shortage of skilled trade workers.
Increased Trade Partner Participation Despite Continued Skilled Labor Shortage
Want to discuss the local market position and forecast? Connect with Jeff Courtney, Preconstruction Manager in Tampa.
Design Sentiment
Don’t miss the new design sentiment section to see what our leaders had to say about the industry’s top concerns.
Want to discuss the local market position and forecast? Connect with Stephen Hattwick, Preconstruction Director in San Francisco.
See a summary of our market sector performance and local escalation forecast below.
Market Sector Overview
Local Escalation Forecast
Market is experiencing and/or is expected to experience significant/ abnormal construction price inflation (+6% per annum)
Market is busy and construction price inflation is/is expected to be above normal (between 4 and 6% per annum)
Market is stable and construction pricing / inflation is within traditional indices (less than 4% per annum)
Market is recessed and construction pricing / inflation is flat or negative
Market Sector is very busy with numerous large active projects either in Preconstruction or Construction
Market Sector is stable with some large active projects either in Preconstruction or Construction
Market Sector is slow with few large active projects either in Preconstruction or Construction
Skanska is not tracking this sector closely enough in our regional market to comment
Key
Market Sector Forecast
Cost Escalation Forecast
Market sector summary
Local escalation summary
Local Construction Cost Forecast
Next 6 months
6 months - 1 year
1 - 2 years
+6% per annum
4-6% per annum
>4% per annum
Market is recessed
Want to discuss the local market position and forecast? Connect with Tom Feeney, Vice President of Preconstruction in San Francisco.
Market is experiencing and/or is expected to experience significant/ abnormal construction price inflation (+5% per annum)
Market is busy and construction price inflation is/is expected to be above normal (between 3 and 5% per annum)
Market is stable and construction pricing / inflation is within traditional indices (less than 3% per annum)
This Construction Market Trends report is developed by Skanska USA Building’s Project Planning, Strategic Supply Chain and Strategy teams. We publish the report quarterly, each February, May, August and November, with an accompanying Market Trends webinar. Historical quarterly reports can be found below. Sign up to be notified of the webinar and report release here.
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Tom Park
Rob Cantando
Sarah Vakili
David Formichella
Kez Gneiting
National Supply Chain Manager
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