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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Winter 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
Tariffs, Immigration and California Wildfires Create Concern in 2025
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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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
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. A 30-day pause on the previously announced 25-percent tariffs on Mexico and Canada, as well as the new order announcing a 25-percent tariff on all imported steel and aluminum, creates market uncertainty. The implementation of a 10-percent tariff on Chinese imports, as well as Chinese retaliatory tariffs, will have a further definitive impact on construction supply chains.
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. U.S. manufacturers could likely meet 75 percent or more of these material needs. For the remaining imported materials, a 20-percent tariff average could drive direct costs up by 4–8 percent depending on the project.
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.
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, predominantly within the residential construction workforce. 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.
Monitor the cost and schedule impacts that will likely arise from greater competition for labor. Consider risk mitigation strategies for potential delays and increased wage premiums during project planning. Be alert to regional labor market changes and watch for greater labor cost escalation in regions more heavily affected by immigration.
Immigration
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 estimated in the range of $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.
Pay attention to your regional market to understand potential supply chain impacts on your projects. Watch for changes to California building codes that could occur as rebuilding plans are considered.
California Wildfires
Contact us for more detailed, up-to-date information
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How to prepare:
Analysis
Local Forecast
Winter Market Trends Report published: February 11, 2025
Winter 2025 Supply Chain
Source: U.S. Energy Information Administration All 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 December 2024 Drywall data as of January 2025, Gypsum data as of January 2025
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: 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
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 and cement pricing is stable, trending up slightly. However, roughly one-third of cement imports into the U.S. originate in Canada and Mexico. Potential tariffs will impact this category.
Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index Concrete Block and Precast Concrete data as of December 2024 4000 PSI data as of December 2024
Major drywall producers have announced price increases in the January/February timeframe. Increases vary but are as high as 20 percent.
Lumber pricing saw a gradual recovery, climbing steadily from a low point in July and hitting a high point in November 2024. Potential Canadian tariffs will have the largest impact on pricing, as Canada is the largest supplier of U.S. lumber.
Copper prices increased due to supply shortages caused by production decreases. Zinc prices have fallen due to low demand. Nickel prices rose slightly as supply and demand balanced out. Aluminum prices have decreased slightly but are expected to increase in the future. Tariffs are expected to impact pricing outlook.
Source: Kitco All data as of January 2025
The recent uptick in natural gas pricing is largely attributed to winter weather and speculation around changes in U.S. policies. Other fuel pricing remains stable, but we will monitor further policy impacts in the months ahead.
PVC: PVC pipe prices continue to fall as the resin supply chain has stabilized and demand for single-family homes remains low. Copper: Raw copper prices were down significantly since the peak in May, resulting in lower average pipe costs compared to June, ending the year flat. Ductile Iron Pipe: Prices remain flat over the past year as raw material supply and demand have stabilized.
Structural steel demand remains sluggish. Pricing is flat and trending slightly down, still largely impacted by the slow commercial office market. Lead times remain stable. The recently announced 25-percent tariff on steel and aluminum will cause steel prices to rise. This price increase, however, could further weaken demand.
Structural Steel
While there are some exceptions, lower raw material costs and stabilized supply chains have resulted in shorter lead times and stable pricing. One exception is medium-voltage cable due to high demand for new electric services relative to domestic manufacturing capacity.
Lead times for electrical gear across all equipment categories, with the exception of ATS, is down due to continued investment in North American factory capacity. By example, lead-times for switchgear reduced 2-3 weeks, busway by 1-2 weeks, panelboards by 1-2 weeks, transformers by 3 weeks. Prices in 2025 may rise significantly due to tariffs on all steel and aluminum imports. Potential tariffs on all Mexican and Canadian goods may add further costs.
Source: FRED, All data as of December 2024
Data center demand continues to push lead times for >2MW gensets in the range of 2–3 years as owners place advanced orders for delivery in 2027 and 2028. Actual lead times vary depending on manufacturer and specifications. Lead times for gensets below 2MW are significantly lower. 230kW to 1.99MW are running 46–52 weeks; 300kW to 1000kw are running 36–44 weeks; below 300kw range from 12–20 weeks. Prices in 2025 may rise significantly due to tariffs on all steel and aluminum imports. Potential tariffs on all Mexican and Canadian goods may add further costs.
Source: FRED . All data as of December 2024
Lead times for HVAC equipment have been stable for most equipment categories. Prices continued to increase over the past year by roughly 5 percent annually due to strong demand and higher labor costs. Prices in 2025 may rise significantly due to tariffs on all steel and aluminum imports. Potential tariffs on all Mexican and Canadian goods may add further costs.
Potential placeholder for data
Insulation
Some insulation increases were implemented in January. However, these are not across the board increases from all manufacturers (as seen with drywall). Announced increases range from 6–12 percent.
Source: U.S. Bureau of Labor and Statistics data as of January 2025
Supply Chain Analysis
In 2025, the stability of global supply chains faces significant threats that could disrupt operations and impact manufacturers’ supply chains. Foremost among these threats are tariffs: 25 percent on all goods coming from Mexico and Canada (which are pending), as well as 10-percent tariff on Chinese goods. Uncertainty remains around the possible implementation of tariffs in March, additional future tariffs, and their potential duration, effects and retaliatory response.
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.
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.
Temporary until we fix PowerBI link
Our Strategic Supply Chain Team is closely monitoring the impact of weather related disasters and geopolitical events on the supply chain.
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+
Winter 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
Source: ENR All data as of February 2025
MEP costs make up a significant portion of total construction costs. As previously noted, the ENR indices don’t include MEP trades. Our belief is that escalation levels are outpacing the ENR forecasts when MEP trades are accounted for. 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, presented here for the first time. While regions are feeling the pace of escalation at different rates given local volumes, our escalation forecasts on individual projects are likely more aligned with the composite index.
Source: Engineering News-Record and Skanska All data as of February 2025
The ENR Materials Index continues to remain nearly flat. Like the BCI and CCI iIndices, we previously noted that the ENR indices are void of mechanical and electrical material, which has escalated at a more significant pace (shown in our new Composite Construction Cost Index). It's also worth noting that we expect the likely tariff assessments to put upward pressure on material costs in the months ahead.
Source: Engineering News-Record Data as of February 2025
While total construction starts dipped two percent in December from November, for the 12 months ending in December 2024, starts were up six percent over 2023. Total nonresidential building starts were up four percent in 2024 compared to 2023; institutional starts rose 16 percent, and commercial starts rose eight percent, but manufacturing starts were down 35 percent through December 2024.
Source: Dodge Data & Analytics, December 2024
Total construction spending during December 2024 was estimated to be $2.19 trillion (seasonally adjusted annual rate). The value of construction in 2024 was $2.15 trillion, approximately 6.5 percent above the total spend in 2023. Both residential and nonresidential construction saw significant increases in 2024 from 2023—5.9 percent and 5.3 percent, respectively.
Source: U.S. Census Bureau, February 2025
The Architecture Billings Index (ABI) fell to 44.1 in December 2024, ending the year on a low note. Billings have decreased for all but two months every month since October 2022. According to the AIA, “while not a full-fledged recession, this period of softness and uncertainty has been challenging for many firms. And prospects for future work remain soft as well.”
Architectural Billing Index
The national U.S. unemployment rate remained nearly unchanged at 4.0 percent as of January 2025. Total nonfarm payroll employment experienced a slowdown in growth in January, with only 143,000 additional jobs added, 44,000 of which were in the healthcare sector. Construction unemployment rose to 6.5 percent as of January 2025. Seasonally adjusted construction employment in January totaled 8,291,000, an increase of only 4,000 from December. According to the Associated General Contractors of America (AGC), tightening labor market conditions may undermine future construction industry hiring.
Source: U.S. Bureau of Labor Statistics All data as of January 2025
Employment
Dodge Momentum Index
Construction Starts Index
ENR Construction Cost Index
Source: AIA, All data as of December 2024
December ABI Report
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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
Infrastructure, aviation and healthcare remain driving market forces, with universities providing a steady stream of decarbonization projects. Pharma and high tech are starting to show signs of growth, with increased construction starts anticipated as the weather starts to warm. Commercial development likely won’t see growth until at least 2026, as high vacancy and interest rates restrain the market. Local commercial properties are investing in upgrading amenities to try to keep existing tenants. Many local in-planning wind projects have been delayed or canceled in response to tariff and federal funding announcements, and some market uncertainty will continue as new announcements are made. However, diverse market streams position the region well to continue growing at normal or slightly above normal rates.
Want to discuss the local market position and forecast? Connect with Matt Impastato, Vice President of Preconstruction, Boston.
Market Diversity Continues to Drive Boston Growth
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Miami/ Ft. Lauderdale
N. Carolina/ Virginia
Atlanta, GA
With the historic increase in mission critical and technology projects in Atlanta, there's continued pressure on skilled labor and subcontractor capacities. As a result, the billion-dollar growth is causing construction managers and owners to strategically time projects based on skilled labor and subcontractor availability. Commercial Real Estate continues to be soft due to increasing interest rates and high vacancy rates in metro Atlanta. We do not expect this trend to improve in the near future. Higher Education and K-12 construction are expected to remain steady due to the governor’s comprehensive education enhancement plan which includes increases in construction for 2025. Finally, we are keeping a close eye on the impact of the recent election on federal and local construction spending. Increased infrastructure spending and reduced regulations will have significant potential benefits; however, the uncertainty of federal funding and overall rising costs will pose challenges for Atlanta going forward.
Expanding High Tech and Mission Critical Sectors Put Pressure on the Georgia Market
Want to discuss the local market position and forecast? Connect with Dane Wooley, Preconstruction Director in Atlanta.
Cincinnati, OH
The regional construction market remains busy, straining the capacity of local trade partners, particularly in the MEP trades. Trade shortages have given the local plumbers and pipefitters strong leverage in this year’s planned contract re-negotiations, which is expected to drive mechanical and plumbing wage inflation. The healthcare, commercial office, education, hospitality, aviation and multifamily residential markets all have large projects in progress, many of them scheduled through 2027. Several battery plant projects have reduced their overall scope, providing some relief to the market and freeing up some MEP trades. As those trade partners look to replace that backlog, it could provide a temporarily more competitive market.
Price Pressure on the Local Construction Market Remains High
Want to discuss the local market position and forecast? Connect with Jeff Smoker, Vice President of Preconstruction in Cincinnati.
Dallas, TX
Even with the uncertainty surrounding tariffs, population growth in North Texas continues to drive new construction projects, particularly in the infrastructure and government markets. Projects like the Dallas Convention Center Expansion and Forth Worth Convention Center Expansion, with budgets close to $5 billion, provide much needed work to the local economy. In transportation, the Dallas Area Rapid Transit (DART) Silver Line, a high speed, 26-mile hybrid rail line, is expected to come online in 2026, connecting three of the fastest growing counties in the country. The Dallas-Fort Worth International Airport (DFW) continues to expand; a new 15-gate Terminal F, with a budget of $1.6 billion, is currently underway.
North Texas Growth Drives Infrastructure and Government Construction
Want to discuss the local market position and forecast? Connect with Linh Le, Vice President of Preconstruction in Texas.
Washington, D.C.
The region remains mixed. Demand for new commercial office space will be limited until more workers return to the office, and the multifamily sector is slow while it waits for more favorable costs and interest rates. Large healthcare and federal government projects are straining local resources, and we continue to recommend early engagement with trades with long lead items to secure early procurement and limit cost escalation. The education market is slow but holds potential for growth, with several K-12 projects in planning and higher education showing some promising opportunities.
Slow Market Continues to Tighten
Want to discuss the local market position and forecast? Connect with Tom Strawbridge, Preconstruction Director in Washington, D.C.
Houston, TX
As Houston sees a noticeable slowdown in the private sector, primarily with office buildings, there are three market sectors providing a continuous stream of work. The first is healthcare, where many leading healthcare systems, including Texas Children's, Harris Health, Methodist Hospital, Memorial Hermann and MD Anderson, have major upcoming expansion or new construction projects with budgets of over $4.2 billion. The second is higher education, with the University of Houston System, Texas A&M University System, Blinn College and Rice University all having projects in the pipeline with combined budgets of over $600 million. The third is aviation, with the George Bush Intercontinental and William P. Hobby airports combining for over $1.7 billion worth of ongoing or in-development projects.
Consistent Projects in Three Market Sectors
The South Florida construction market remains busy in most sectors. Most construction trade costs have stabilized and are experiencing normal cost escalation levels for both material and labor. The exception to this is the electrical and HVAC trades. Electrical gear, generators and HVAC equipment continue to experience significant cost escalation, and they are still facing extended lead times, in some cases over a year or more.
Electrical and Mechanical Trades Drive Costs in an Otherwise Stable Market
Want to discuss the local market position and forecast? Connect with Walt Chislak, Preconstruction Manager in South Florida.
Nashville, TN
In 2024, Nashville was again named one of the top 20 fastest-growing metro regions, coming in at 10th in the country. This has been attributed to the growth in tourism, the healthcare industry and the many businesses establishing headquarters in the Nashville area. Because of this, Nashville remains an attractive construction market, although it has slowed somewhat from the past decade of activity, especially in the private sector. Higher education remains an active market, but new project releases funded by the State of Tennessee are not expected to remain at the elevated levels we have experienced over the past few years. Meanwhile, private healthcare and higher education institutions remain healthy as owners continue to allocate capital for construction projects and are poised to secure new investments through 2025. The East Bank redevelopment and potential sale of SA Recycling (formerly PSC Metals) is expected to further stimulate regional market growth.
Optimistic Growth and Construction Outlook for Nashville
Want to discuss the local market position and forecast? Connect with Adam Hicks, Vice President of Preconstruction in Nashville.
North Carolina/Virginia
Market uncertainty and high interest rates have continued to impact certain sectors, while others—particularly the mission critical, advanced manufacturing and pharmaceutical sectors—remain strong. Large projects in these sectors continue to take up a significant portion of the region's MEP labor capacity, leading to above-normal escalation in these areas. Escalation in civil, structural and architectural trades is trending in a more stable and predictable range. However, concerns about potential tariffs may introduce both actual cost increases and/or speculative increases into future pricing, which should be closely monitored.
Uncertainty Strains Some Markets While Mission Critical and Pharma Surge
Want to discuss the local market position and forecast? Connect with Will Senner, Vice President of Preconstruction in North Carolina and Virginia.
The federal interest rate was reduced in December to around four percent, with two additional cuts anticipated in 2025. The market gains expected from these cuts could be neutralized by concerns over tariffs on materials from overseas and further immigration restrictions, potentially increasing material prices and impacting the labor force. Many projects remain in the planning phases as developers approach construction launches cautiously. Significant investments from the State of New Jersey, totaling several billion dollars, are expected to drive future construction in education, infrastructure and transportation New Jersey’s planned wind farms face potential setbacks in the face of a likely executive order halting all offshore wind energy projects on the East Coast. Reports also suggest that New Jersey's Atlantic Shores project might be halted due to potential interference with military radars at nearby installations like Joint Base McGuire-Dix-Lakehurst.
Gone with the Wind
Want to discuss the local market position and forecast? Connect with Nick Culver, Vice President of Preconstruction in New Jersey.
New York, NY
Healthcare remains strong, with several active institutions in the Long Island area. The life sciences sector is very active, with both the NYCEDC SPARC project and the NYCEDC Climate Exchange on Governors Island in the design phase. Higher education is momentarily static but is awaiting future projects at the end of Q1 and beginning of Q2. The commercial sector, on the other hand, is very active, with a supertall skyscraper designed by signature architects Foster + Partners and OMA set to open soon. JP Morgan's headquarters has topped out and is one of the tallest buildings currently under construction. In the sports stadium sector, planning is underway for New York City Football Club’s Etihad Park, which will include a 650-seat public school, affordable housing units and a hotel. Transportation and infrastructure remain robust, as NYC Transit is ordering new rail cars. The electrification of the LIRR Main Line, along with improvements to Port Jefferson and Montauk Branches, will keep heavy infrastructure contractors busy.
The Winter Market Outlook for Metro New York is Warming Up
Want to discuss the local market position and forecast? Connect with John Tamborino, Vice President of Preconstruction in New York.
Orlando, FL
Central Florida's well-documented growth in recent years is projected to continue for the foreseeable future. While the local market views the new administration as a catalyst for growth, promises of policy change bring concern to upcoming projects. The effects of tariffs are difficult to predict without specifics, but some form of added costs will be incurred. Also, changes in immigration policy could shrink the construction labor pool, creating greater demand and thereby escalating labor wages.
New Year Brings New Concerns
Want to discuss the local market position and forecast? Connect with Tom Stickrod, Vice President of Preconstruction in Orlando.
Philadelphia, PA
Preconstruction continues to dominate project activity across multiple market sectors, including higher education, healthcare and life sciences. We anticipate several large projects will hit the market in 2025 as cost cost levels stabilize regionally and we already see clients starting to release multiple projects that were previously held back due to internal and market constraints. Multiple existing clients are exploring capital improvement projects on ageing MEP infrastructure. The healthcare market sector is heating up as competition increases between healthcare institutions. We anticipate the data center market to similarly grow in the region as AI continues to dominate the technology sector. We remain optimistic about the future of construction in the region and the potential for new opportunities not presently on our radar.
Higher Education and Healthcare Markets Continue to Surge
Want to discuss the local market position and forecast? Connect with James Lane, Vice President of Preconstruction in Philadelphia.
Phoenix, AZ
Phoenix remains a robust data center and semiconductor market. However, several semiconductor manufacturers have slowed new construction but should return later this year. As for data centers, the market continues its trend of, “build more, faster,” due to the growing need for AI resources. The Phoenix market continues to have steady construction employment in residential, commercial and municipal sectors as a result of the rapid growth of the metro Phoenix area.
The Winter Chill is Here, but the Market Remains Strong
Want to discuss the local market position and forecast? Connect with Tom Feeney, Vice President of Preconstruction in Phoenix.
Portland, OR
With the new year comes new resolutions and a new local government pledging change and improvements. This, along with the falling interest rates, has sparked more inquiries by private owners, potentially signaling a future increase in demand. The state's largest school district will be referring a $1.8-billion bond to the voters in May, which is almost certain to pass. This keeps the K-12 market strong, alongside healthcare, industrial and civic work. Unfortunately, the state was unable to secure funding for a federal innovation hub and will not be moving forward with plans to develop land for high tech R&D businesses.
An Improving but Uneven Outlook for Oregon
Want to discuss the local market position and forecast? Connect with Steve Clem, Senior Vice President of Preconstruction in Portland.
San Antonio, TX
Two major announcements have recently been made in San Antonio that will drive significant economic and construction growth in the region. First, UTSA and UT Health San Antonio announced a merger that will become the third-largest institution in the state, behind UT Austin and TAMU. This merger will further enhance the region’s dedicated research focus, and we will be closely watching how this will impact the construction industry. Second, in November the city unveiled plans for Project Marvel, an ambitious multibillion-dollar project that includes a new Spurs arena, a 1,000-key hotel, a significant expansion to the convention center, a complete reimagining of the Alamodome, new entertainment venues, a land bridge over I-37 and other mixed use developments. This plan will completely transform downtown, significantly impacting construction through 2035.
Marvel-ous
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 San Francisco International Airport continues to advance its strategic five-year plan, with individual airline projects picking up speed and over $5 billion in projects being approved. Healthcare remains steady in the Bay Area, with over $1 billion in projects in the pipeline over the next few years. Science and technology companies continue to have small renovations and IT projects, but no major projects have been identified yet for 2025. Additionally, power demands are outpacing supply, so there are no new mission critical projects on the horizon beyond those already planned. Instead, owners are opting to build in Reno, where the data center market is growing rapidly, pulling resources away from the Bay Area and affecting the local labor supply. A $1.5-billion community colleges bond was passed in November 2024 that will result in multiple new projects over the next few years, but it will be a long time before that materializes in actual construction.
Picking Up Steam and Preparing for the Future
Seattle, WA
Seattle’s project opportunities vary significantly across market sectors as the economy remains sluggish. The residential market continues to be slow, and the commercial market remains saturated with available office space, so there is little work on the horizon. Healthcare fares slightly better, with a few small projects coming to market, but larger projects continue to be postponed. Similarly, the aviation market is moving along at a steady pace. On a more positive note, K-12 remains strong, and although the November election paused some projects, the market remains competitive as contractors diversify their sectors. The higher education market has been steady. Several major universities are moving forward with expansion plans and look to make use of energy grants from the State of Washington. Mission critical also remains strong, and many projects are in preconstruction or are underway as owners announce future expansion plans, both nationally and locally.
Seattle Market Remains Competitive
Want to discuss the local market position and forecast? Connect with Dan Curtiss, Vice President of Preconstruction in Seattle.
Tampa, FL
The Tampa Bay construction market continues to see strong job growth, leading to labor shortages. With high population growth, single and multifamily housing, healthcare, K-12 and higher education projects show no signs of slowing, putting additional pressure on the existing shortage of skilled trade workers. Supply chains have stabilized, and lead times are not overly extended. Though slowing, overall costs are still trending slightly up.
Tampa Bay Market Faces Skilled Labor Shortage Amidst Continued Growth
Want to discuss the local market position and forecast? Connect with Jeff Courtney, Preconstruction Manager in Tampa.
Want to discuss the local market position and forecast? Connect with Stephen Hattwick, Preconstruction Director in San Francisco.
Design Sentiment
Don’t miss the new design sentiment section to see what our leaders had to say about the industry’s top concerns.
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
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, June, 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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Spring 2022 Report
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Fall 2022 Report
Executive VP of Project Planning
Preconstruction Coordinator
Vice President of Strategic Supply Chain
Director of Strategic Supply Chain
Senior Director, Business Planning and Strategy
Tom Park
Rob Cantando
Sarah Vakili
David Formichella
Kez Gneiting
National Supply Chain Manager
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