Construction Costs Expected to Rise Further in Late 2026 as Contractors Adjust Pricing
According to JLL’s midyear update, construction costs are rising due to increasing material prices and labor constraints. Final-cost indices for U.S. construction have already climbed about 5% compared to a year ago, with more contractor repricing expected in the second half of 2026 as they seek to protect margins. Material price inflation has outpaced final-demand pricing increases so far this year, creating pressure on contractors who are now likely to pass these costs onto clients. Tariffs affecting metals and other construction materials have contributed significantly to rising input prices, with some products facing tariffs of up to 50%. JLL also notes that labor shortages remain acute in over half of U.S. metro markets. The firm anticipates continued cost pressures through the remainder of 2026, particularly for projects requiring constrained specialty trades such as electricians and HVAC technicians. With interest rates showing less potential relief than previously expected, owners are advised to engage contractors early to secure favorable terms before further inflation impacts bids.
Topics: construction costs labor constraints material inflation tariffs