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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Summer 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
Uncertainty Becoming an Increasingly Popular Description for the Construction Marketplace
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
The construction economy had been settling into a new normal post-pandemic. While pricing levels escalated rapidly from 2021 to 2023 and commercial office growth slowed, high tech sectors boomed. The Fed raised interest rates to combat inflation, yet capital plans progressed despite cost pressures. The first two quarters of 2025, however, have proved tumultuous. The Trump administration has moved aggressively with policy changes that directly impact many construction industry sectors and planned capital project spending. The theme of 2025 thus far is “uncertainty.” Owners are asking: Will our healthcare system still receive critical funding? What infrastructure projects are now in jeopardy? What will changing tariff policies do to my project budget and supply chain? Will the work of ICE make an already strained labor shortage a bigger problem? How will the One Big Beautiful Bill or renegotiations to the CHIPS Act affect my business? These questions and many more have made the word “uncertainty” the center square on many 2025 capital planning bingo cards. While uncertainty abounds, so does opportunity. Although some projects pulled back following federal policy changes, others forged ahead. In many instances, projects pressing forward are seeing improved bidding results against new budget targets. We attribute this mainly to market uncertainty, with the tradeoff being some reduction in opportunities in many markets. Further, many commodity and complex product manufacturers are managing tariff uncertainty with strategic adjustments to their supply chains, helping to mitigate cost impacts. As we all navigate the choppy policy waters, we strongly encourage project stakeholders to evaluate their local market conditions; there may be opportunities amidst the uncertainty.
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
Summer Market Trends Report published: August 5, 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.
Materials
Total: 25%
Steel
Aluminum
Copper
Reciprocal
50%
Mexico
All Goods
USMCA
—
Canada
Lumber
35%
27.5%
China
55%
Current Tariffs Implemented by the U.S. Impacting the Construction Industry
Many of the new country-specific tariffs that have been announced for August 1 will have little to no effect on construction material pricing. In fact, 17 of the 25 nations targeted for tariffs each account for less than one percent of total U.S. imports. The biggest impacts will be felt on materials imported from the EU, Mexico and Canada.
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.
The new copper tariff could prove to have a significant impact on construction material pricing. Copper is used in many different applications, like wire and electrical components, pipe and fittings, HVAC coils, and flashing. In 2025, the price of common diameters of copper pipe is up over 40 percent. In addition, copper wire is up 14–17 percent since the start of the year. We anticipate these trends will continue and will accelerate once the copper tariff is implemented.
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).
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.
14.5%
tariff on all Canadian lumber
30-55%*
Tariff rate depends on the type of product being imported.
Summer 2025 Supply Chain
Source: U.S. Energy Information Administration, July 2025
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics and Producer Price Index, Drywall data and Gypsum data as of June 2025
Source: Steel Benchmarker, June 2025
Source: U.S. Bureau of Labor and Statistics Producer Price Index, June 2025
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index, June 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
Concrete prices continue to rise. The average price of one yard of concrete is up nine percent year-over-year. Tariff impacts in this category are minor, as three-quarters of the cement used in the U.S. is produced domestically.
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 pricing continues to hover at low levels. Housing starts were seven percent below year-ago levels in May and down 9.8 percent compared to April. Homebuilder sentiment has declined amid high interest rates. Despite recent tariff changes on Canadian lumber, overall lumber pricing continues to hover at low levels, though it may increase in the coming months.
Copper prices surged to record highs over tariff-related concerns. Aluminum prices have continued to rise. Prices for Nickel, a key ingredient in the manufacturing of stainless steel, remain stable.
Source: Kitco, June 2025
Unleaded fuel pricing remains stable, while diesel and crude oil pricing has been edging up. Natural gas pricing has trended up due to utility companies’ reliance on power generation, as well as loads increasing to meet summer cooling needs.
PVC: Soft demand for PVC pipe continues to drive prices down. Carbon Steel: Carbon steel pipe prices remain flat to slightly up, despite increased steel tariffs. Copper: The rising cost of copper has driven up copper pipe pricing more than 30 percent in 2025.
Structural steel pricing continues to move slowly and steadily upward. However, CRC and HRC pricing remains relatively flat. Since the start of the year, wide flange pricing is up nearly 10 percent, which includes a $40/ton increase in June. Wide flange is typically the major cost driver of a fabricated steel package.
Structural Steel
Lead times for electrical gear are trending down—largely as a result of manufacturer investment in factory expansions to increase production capacity—but 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 8–10 percent in 2025, primarily due to strong demand and tariffs.
Source: FRED, June 2025
Demand for data center gensets (>2750MW) remains very strong. However, additional capacity investments are starting to bring lead times down to a maximum of 104 weeks, but they can be as low as 37 weeks, depending on the manufacturer. Lead times for 1MW to 2.7MW gensets remain between 34–96 weeks; 250kw to 1MW are down slightly to 30–35 weeks; below 350kW are stable at 18–30 weeks. Again, actual lead times vary depending on the manufacturer and specifications. Major generator manufacturers are suggesting prices will 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 10–12 percent depending on the manufacturer, primarily due to tariffs and strong demand. Recently announced copper tariffs may have an additional price impact in the fourth quarter as record high copper prices move through the supply chain.
Insulation
Mineral wool insulation providers are pushing through an eight-percent price increase in July. Unlike some other materials subject to tariffs, it does appear that this increase is being reflected in the market, causing bid prices to increase.
Source: U.S. Bureau of Labor and Statistics, June 2025
Supply Chain Analysis
Halfway into 2025 it appears the dramatic impact of tariffs that many economists were predicting have not yet materialized. While it’s true that the “Liberation Day” tariffs announced on April 2 have been on hold or replaced with lower tariff rates, significant tariffs remain in the construction market—most notably on copper, steel and aluminum. However, even with 50-percent tariffs on these metals, we have not yet seen a dramatic uptick in the pricing of finished products in the marketplace. Of course, this could all be a matter of time. Prior to tariff implementation, there was a very high level of buy-ahead activity. Those inventories helped manufacturers delay the impact of higher costs due to tariffs. In fact, CPI numbers were relatively stable until June, when CPI jumped to 2.7 percent. Economists are now saying that this is the first sign of tariff impacts. Is construction material price inflation just getting started? As some of the construction verticals have slowed—most notably single-family construction— weakened demand has helped to keep material pricing in check. How long will that continue? What effect will new, higher tariffs have on the overall economy? Will trade deals negate the need for new tariffs? Only time will tell.
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
2MW+
The Jury Is Still Out on the Impact of Tariffs
Summer 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 12 months ending August 1 saw the CCI move up only 2.4 percent and, perhaps more significantly, just under one percent over the past six months. Similarly, the BCI index moved up 2.7 percent in the past 12 months and just under two percent in the past 6 months. While many expected tariffs to drive up costs, ENR's notable indices reflect a lower-than-average increase, which could be attributed to pullbacks in construction investments in some sectors. Again, it is worth noting that these indices do not include key MEP trades which have had a higher trajectory given the investment in high-tech sectors.
Source: ENR, August 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. Our MEP data shows an annual increase of close to 4.5 percent in those key trades, contributing to a Composite Index increase of 3.4 percent for the 12 months ending in August. This is almost a full percentage point above the ENR indices. 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, August 2025
The ENR Materials Index dipped earlier in the year but recently is trending up, attributable largely to real or anticipated impacts of tariff policies. 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 continue to put upward pressure on material costs, yet a slowdown in construction volume could have an offsetting impact.
Source: Engineering News-Record, August 2025
The Dodge Momentum Index (DMI) grew by 6.8 percent from May to June, driven by momentum in warehouse planning and sustained data center levels. Year-over-year, the index is up 20 percent. Even if you remove data center projects from 2023 to 2025, the DMI would still be up 23 percent from June 2024, with commercial planning up 12 percent.
Source: Dodge Data & Analytics, June 2025
Total construction starts were up 16 percent in June 2025 to a seasonally adjusted annual rate of $1.33 trillion, driven by strength in manufacturing and data center construction. On a year-to-date basis, starts are up by one percent from last year. Nonresidential building starts improved 39 percent in June and are up six percent on a year-to-date basis. Despite this growth, Sarah Martin, associate director of forecasting at Dodge Construction Network cautioned that “risks remain elevated that construction starts will be more subdued in the back half of the year—alongside ongoing uncertainty over trade policy and the broader economy.”
Source: U.S. Census Bureau, June 2025
The Architecture Billings Index (ABI) is still in decline, with a slight drop to 46.8 in June, down from 47.2 in May. Southern firms saw a minimal increase in billings, with a 50.6 ABI—the first increase since October 2024. Design contracts improved to 46 in June, up slightly from 45.9 in May, indicating that more customers are beginning projects. The value of newly signed design contracts dropped in June, marking the sixteenth month of consecutive decline.
Architectural Billing Index
Construction unemployment remains unchanged in July at 3.4 percent. Driven mainly by nonresidential increases, year-over-year construction employment has increased by 1.2 percent, yet only 2,000 jobs were added in July. The national unemployment rate remains at 4.2 percent as of July 2025. Total nonfarm payroll employment increased by 73,000 in July, averaging 35,000 over the last three months, which is worse than during the pandemic. Employment continued to trend up in healthcare and social assistance, with drops in federal government jobs.
Source: U.S. Bureau of Labor Statistics, July 2025
Employment
Dodge Momentum Index
Construction Starts Index
ENR Construction Cost Index
Winter 2025 Indices
Source: AIA, June 2025
June 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
Proposed NIH funding reductions have slowed down construction starts, with many projects facing recent pauses or delays. This slowdown is causing subcontractors to get more aggressive, resulting in prices remaining at or below normal escalation rates. Design firms are starting to see increases in volume, while vacancy rates for lab and office space remain high, constraining commercial development starts. Owners are wanting to get projects shovel-ready should the office, lab and life science markets recover. Several in-progress, large-scale hospital projects will provide stability in the healthcare sector for the next several years. Infrastructure and aviation show strong growth, and new project starts continue 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 Stays Cool Despite Summer Heat
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Miami/ Ft. Lauderdale
N. Carolina/ Virginia
Atlanta, GA
Mission Critical and Technology Projects: A surge in high-tech and infrastructure projects is fueling robust growth. This expansion is driving heightened demand for skilled labor and specialized subcontractors, creating significant openings for firms in the mission critical and technology sectors. 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: Federal policies that boost infrastructure spending and ease regulatory burdens support additional mission critical opportunities. Despite federal funding uncertainties, the overall trajectory points toward increased construction activity. Industrial Real Estate: Atlanta is experiencing an industrial real estate boom. Leasing activity has risen nearly 15 percent, with annual net absorption nearly doubling since 2023, signaling strong momentum in this expanding sector. Residential Construction: As mission critical developments place additional pressure on labor markets, the 12-percent year-over-year increase in new home construction permits in metro Atlanta underscores the region’s rapid growth.
Mission Critical Opportunities Continue to Expand
Want to discuss the local market position and forecast? Connect with Dane Wooley, Preconstruction Director in Atlanta.
Cincinnati, OH
Construction cost escalation concerns in our region are easing. Education clients are continuing to move forward, while private projects with more complicated funding are slowing. Delays in several major projects have opened capacity for many of our trade partners. In addition, although construction cost inputs continue to rise due to tariff related concerns, they are not all being passed on to final bid costs. Manufacturers, suppliers and trade partners are also absorbing some of those costs in an effort to be more competitive, but it's hard to say how long they will be able to cut margins and avoid passing on price increases. However, in the near term, it is helping to stabilize construction costs in this region.
Price Escalation Concerns Appear to be Easing Slightly
Want to discuss the local market position and forecast? Connect with Jeff Smoker, Vice President of Preconstruction in Cincinnati.
Dallas, TX
Capitalizing on Long-Term Growth
Want to discuss the local market position and forecast? Connect with Linh Le, Vice President of Preconstruction in Texas.
Washington, D.C.
Northern Virginia is already the world's largest data center market, with 4900 MW of computing power, another 1100 MW currently under construction, and 5500 MW in planning according to JLL. At this pace, mechanical and electrical labor will continue to be strained, and equipment lead times will remain extended. Tariff policies have created uncertainty in other market sectors, causing some projects to be paused or cancelled. Commercial office and multifamily sectors remain slow. Multifamily projects largely consist of affordable housing or office building conversions. Higher education has slowed due to funding reductions and reduced enrollment. These factors have caused staff reductions at some local universities. Public works projects are presenting more promising opportunities including parks, community centers and K–12 schools.
Data Centers Continue to Outperform Other Sectors in D.C.
Want to discuss the local market position and forecast? Connect with Tom Strawbridge, Preconstruction Director in Washington, D.C.
Houston, TX
Houston remains one of the most active construction markets in the state, supported by a diverse mix of public, private and institutional investment. The next two years will be pivotal for capturing value across civic infrastructure, life sciences and mixed-use development. While some higher education and healthcare projects face funding constraints due to the failure of the CCAP legislative appropriations request, alternative financing through graants, partnerships and private donations is helping to sustain momentum. Healthcare: MD Anderson Cancer Center is constructing a $1-billion, 1.8M-SF Patient Care Building to expand clinical and support services. Commercial Development: Generation Park continues to grow across 4,000 acres, including a proposed $5.9-billion pharmaceutical manufacturing facility. Urban Infrastructure: Main Street 2.0 will enhance downtown walkability ahead of the 2026 FIFA World Cup™. Mixed Use: Park Eight Place will transform the former Halliburton campus into a $1-billion, 70-acre mixed-use destination. Public Space: The $310-million Buffalo Bayou East project will nearly double the size of Tony Marron Park.
Active and Diverse
The South Florida market appears to have absorbed the initial wave of tariffs from last quarter, with net price increases coming in well below the initially estimated figures. Now, the market is once again bracing for impact as it navigates the latest round of tariff announcements. The commercial, healthcare and higher education sectors remain strong and stable for now, but this could shift due to recent Medicaid cuts and reductions in state education funding. Future projects may face delays or be scaled down to align with smaller budgets. We have recently observed an uptick in subcontractor bid participation, which may indicate a slight softening in these sectors. While some trade partners look to fill gaps in their backlogs for the second half of 2025 and beyond, others continue to report strong pipelines and remain busy.
South Florida Market Holds Steady with Some Cause for Caution
Want to discuss the local market position and forecast? Connect with Walt Chislak, Preconstruction Manager in South Florida.
Nashville, TN
The Middle Tennessee construction market is currently navigating a complex landscape shaped by a mix of economic and legislative variables, including federal legislation, tariffs, interest rates and a supply that exceeds demand for some markets. Despite these challenges, business and political leaders remain optimistic about the region’s long-term prospects. Key sectors—such as healthcare, higher education and research—are adjusting to changes in federal policy, which may lead to a reduction in project funding and new starts. Meanwhile, private developers are proceeding with caution, with some opting to delay contract closings, scale back development plans or divest from real estate holdings altogether. The commercial office market is experiencing vacancy rates of between 20–22 percent, while multifamily properties are offering concessions to fill units—both signs pointing towards a slowdown in new project starts. However, the hospitality sector remains strong, buoyed by Nashville’s vibrant entertainment economy. The East Bank continues to evolve, with significant public and private investment signaling confidence in its future growth. As a result, subcontractor backlogs are shrinking, leading to increased bid coverage and heightened competition.
Middle Tennessee Construction Market Faces Shifting Economic and Legislative Headwinds
Want to discuss the local market position and forecast? Connect with Adam Hicks, Vice President of Preconstruction in Nashville.
North Carolina/Virginia
The current market is generally in a holding pattern, with most planned projects continuing to move forward as anticipated. The healthcare and mission critical sectors remain particularly strong, with many significant projects being announced and progressing on schedule. In contrast, other sectors are exhibiting more volatility. The higher education sector, for example, has experienced several project cancellations or pauses, largely due to federal funding restrictions. Meanwhile, the pharmaceutical and manufacturing sectors present a mixed picture, with some major projects moving ahead while others have been paused or cancelled. Subcontractors continue to report robust backlogs in the near term, although they are keen to secure additional work for late 2026 and 2027 amid ongoing economic uncertainty. Tariffs remain a prominent topic in the region. While the initial price spikes have largely subsided, there is lingering uncertainty about potential cost increases when manufacturers release materials and equipment stockpiled ahead of tariff implementation.
Market Holds Steady Amid Continued Uncertainty
Want to discuss the local market position and forecast? Connect with Chris Littlefield, Vice President of Preconstruction in North Carolina and Virginia.
New Jersey is surging ahead with transformative infrastructure and development projects despite tariffs and the withdrawal of federal funds. The Raritan River Bridge replacement broke ground in June, replacing NJ Transit’s aging span with a modern lift bridge to improve reliability on the North Jersey Coast Line. Meanwhile, the main arch of the Portal North Bridge was recently installed, with the first track set to open in 2026. At Newark Liberty Airport, a $160-million western entrance project is underway, enhancing pedestrian, bike and transit access. Urban revitalization is also accelerating. The Essex Hudson Greenway, a nearly nine-mile linear park, started construction, with its Newark Kearny section opening by late 2025. In Jersey City, the 505 Summit Tower has topped out, and Newark’s proposed 51-story Mulberry Pointe has been approved but faces legal hurdles. New Jersey’s entertainment sector is also booming. Netflix has broken ground on a $1-billion production campus at Fort Monmouth, while Lionsgate is developing a $125-million state-of-the-art studio in Newark. These projects cement the state’s rising status as a hub for film and television production.
Despite Headwinds, New Jersey’s Construction Market Heats Up This Summer
Want to discuss the local market position and forecast? Connect with Nick Culver, Vice President of Preconstruction in New Jersey.
New York, NY
Current tariffs have increased construction costs, prompting contractors to add 5–10 percent contingencies to address financial uncertainty. Despite this, many projects continue to move forward. Northwell Health’s $2-billion Lenox Hill Hospital expansion aims to modernize a major Manhattan medical center with a 436-foot-tall patient tower, upgraded surgical and emergency services, and private rooms. The project is now under city council review, working to secure commitments to environmental monitoring and community engagement to address local concerns. In Queens, construction of the $780-million Etihad Park stadium is underway, anchoring a $3-billion Willets Point redevelopment featuring affordable housing, a hotel and retail space. Construction has resumed on The Torch, a 1,067-foot-tall hotel and entertainment tower, signaling optimism in tourism and hospitality. Phase 2 of the Second Avenue Subway has progressed into detailed design under a $186-million contract. Despite an estimated $7.7-billion cost, this extension is expected to improve transit access and spur development in East Harlem.
NYC’s Summer Growth Surges Despite Rising Tariffs
Want to discuss the local market position and forecast? Connect with John Tamborino, Vice President of Preconstruction in New York.
Orlando, FL
The current market has begun to cool over the past few quarters, and trade partners are eager to fill their backlogs for the coming year. This is a notable shift from the previous year, where trade partners often had more backlog than they could execute on. Many in the region are working to ensure that the growth they have seen over recent years does not regress. If they are able provide consistent work and maintain their current workforce, they should be able to increase productivity levels in the future as competition for talent eases.
Market Conditions Have Cooled, but Outlook is Still Positive
Want to discuss the local market position and forecast? Connect with Tom Stickrod, Vice President of Preconstruction in Orlando.
Philadelphia, PA
We are starting to see more activity in our market as the discussions on tariffs calm and we gain more clarity on material costs. Several significant higher education projects have entered planning despite the sector having been quiet for some time, which is an exciting development. The science and technology sector is also gaining momentum, with multiple projects in our region entering construction. Healthcare continues to face challenges, and some projects have been put on hold. However, certain types of facilities, including ambulatory surgery centers and behavioral health projects, are seeing an uptick. We are also seeing owners embrace the IPD model more frequently, a trend we hope to see more of in the future.
Region Continues to Surge Despite Tariff Uncertainty
Want to discuss the local market position and forecast? Connect with James Lane, Vice President of Preconstruction in Philadelphia.
Phoenix, AZ
After four years of aggressive growth, Phoenix has finally stabilized. Growth rates for population, employment and construction activity continue to rise, but at a much slower, more sustainable rate. Private projects still comprise the majority of construction in the Valley, with significant ongoing industrial work driven by data center and semiconductor projects like TSMC. Data center growth is expected to continue its upward trajectory, though major concerns like power availability, tax incentives and new zoning ordinances are being watched closely. Other industries supported by federal funds—such as public works, healthcare and education— are slowing in anticipation of federal funding cuts.
Still Growing, but at a More Reasonable Rate
Want to discuss the local market position and forecast? Connect with Tom Feeney, Vice President of Preconstruction in Phoenix.
Portland, OR
The Portland Metro market is starting to show signs of slowing. Architecture billings are declining, indicating reduced investment in the Portland Metro area, and some design firms are facing workforce reductions due to decreased demand. Competition is high among general contractors and subcontractors bidding on projects. Subcontractor competition in particular has helped stabilize project budgets despite tariff concerns. The K–12 market received a recent boost when Portland voters approved a bond measure to modernize three major high schools, providing $1.8 billion in funding. Additional bonds were passed to support new school construction and modernization efforts throughout the surrounding areas. The healthcare market remains mixed, with a combination of new construction and upgrades to existing facilities. Local public works and municipal projects are beginning to ramp up, although some major infrastructure initiatives have been impacted by federal funding cuts.
Competition Increases as Local Market Slows
Want to discuss the local market position and forecast? Connect with Matt Richardson, Vice President of Preconstruction in Portland.
San Antonio, TX
Tariff-related volatility remains a major concern, leading to rising costs and uncertainty across ongoing projects. Recent executive orders have also caused minor delays in Department of Education projects. While this has spurred some increased subcontractor bidding activity, the overall trend in construction costs remains upward. Despite these challenges, the regional construction pipeline remains relatively stable: Mission Critical Projects: This sector continues to experience robust growth, with sustained momentum expected in the coming years. Airport Expansion: The $1.4-billion Terminal C expansion is progressing well, and the City has committed a further $260-million investment to renovate Terminals A and B. Alamo Colleges Bond: A $1-billion bond measure, highlighted last quarter, was approved by voters in May. Cyber Command Center: The State of Texas has allocated funding for a new Cyber Command facility in San Antonio. SAISD Land Sale: SAISD has approved the sale of a key parcel of land tied to the proposed new San Antonio Missions baseball stadium.
It's a Bird, It's a Plane—No, It's Just Another Tariff
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 continues to see substantial activity and growth in several major sectors. San Francisco International Airport (SFO) is on track with its $5-billion, five-year renovation and expansion plan. Sacramento International Airport (SMF) is likewise progressing in its $1.3-billion SMForward improvement plan, now entering the third year of its four-year program. Healthcare development in the region remains busy in an attempt to meet patient demand and comply with the 2030 California Department of Health Care Access and Information (HCAI) structural performance standards. The education sector is experiencing growth fueled by state bonds passed last year, including $10 billion allocated to K–12 projects. Life science companies are actively planning campus expansions to accommodate research growth over the next several years. New data center projects are slowing due to limited power availability. However, CHIPS Act funding is expected to stimulate innovation and infrastructure upgrades that may help revitalize the technology sector.
Steady Work in Some Sectors While Others Remain Slow
Seattle, WA
Due to tariff uncertainty, many clients are exploring cost options during preconstruction to mitigate tariff impacts. Reduced bidding opportunities have created increasingly competitive pricing as subcontractors try to win work. The public market sectors—supported by recent bond approvals—remain a vital source of opportunity as they push projects into construction and take advantage of the aggressive bidding market. Higher education in particular is driven by school enrollment and energy grants from the State of Washington. City maintenance and operations projects, largely consisting of facility modernizations, also have strong forward momentum. Sound Transit and the Port of Seattle are moving ahead with their projects as population growth drives demand for public transportation. Manufacturing and aviation also show signs of increased opportunities as Boeing revamps its facilities to increase 737 and 777 production. Many firms that have relied on repeat customers are now branching out into new markets, introducing new competition and new risks.
Leveraging a Competitive Market
Want to discuss the local market position and forecast? Connect with Dan Curtiss, Vice President of Preconstruction in Seattle.
Tampa, FL
Despite ongoing concerns, there are no significant project impacts observed from tariffs, immigration or other federal policies. However, the potential for changes to immigration policy remains, which could reduce the labor pool and increase demand and labor costs. The greatest impact of tariffs so far has been the uncertainty they create. While some of our trade partners have reserved their right to increase costs, we have not seen any price increases to date. Slowing sales in single and multifamily housing hasn’t lessened construction demand, but it continues to put pressure on an already strained skilled labor market. In general, costs, lead times and supply chains have stabilized. An increase in trade partners willing to bid, especially on healthcare, K–12 and higher education projects, is a positive sign, indicating ongoing market activity. With no additional or new opportunities in other sectors, it’s business as usual with the steady release of government projects.
Trade Partner Participation Increases and Skilled Labor Shortage Continues
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)
Manufacturing
Transportation
Science + Technology
Aviation
Corporate Commerical
Data Centers
Distribution/ Warehouse
Healthcare
Higher Education
K-12 Education
Tariff-related impacts have been less pronounced in the greater Dallas-Fort Worth area as the region continues to experience sustained growth, driven by strong migration trends. According to POD’s 2025 Moving Trends Report, North Texas remains among the top five U.S. regions for net move-ins, reinforcing its position as a national growth leader. This population influx has kept construction activity robust across multiple sectors. Mixed Use and Residential: Frisco leads with nearly $15 billion in mixed-use projects currently underway, reflecting strong demand for integrated living and commercial spaces. Mission Critical: The DFW Metroplex is emerging as a major data center hub, with Meta, Microsoft, and Google investing in large-scale, campus-style facilities. Airport Expansion: At Dallas/Fort Worth International Airport, the $4-billion Terminal F expansion is progressing, with 31 new gates planned. An additional $1 billion in supporting projects is expected by year-end. Healthcare: Cook Children’s Hospital is investing $400 million in a new Fort Worth facility to meet rising patient volumes and expand pediatric services. Convention and Hospitality: Fort Worth is advancing Phase 2 of its Convention Center expansion, alongside the $217-million Omni Hotel, aimed at boosting tourism capacity. Higher Education: Texas A&M is developing a new law school campus in downtown Fort Worth, complemented by surrounding arts and research facilities. Sports and Recreation: Ahead of the 2026 World Cup, renovations are underway as part of a broader mixed-use development. Frisco also breaks ground on the first phase of a 1,000-acre park, underscoring its commitment to green space investment.
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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