AGC: Construction Costs Rise at Fastest Rate Since January 2023

Jan. 14, 2026 — The producer price index for materials and services used in nonresidential construction rose 0.4% in November and 3.6% over 12 months — the largest year-over-year increase since January 2023, according to an analysis by the Associated General Contractors of America (AGC) of government data. Association officials said the latest survey found rising materials costs are a top concern of contractors for 2026 as firms grapple with a host of tariffs on construction materials.

“Input costs for construction are rising faster than for producers or consumers in general, partly because the industry is faced with steep tariffs on many materials,” said Ken Simonson, the association’s chief economist. “Although many contractors are accelerating purchases and attempting to pass along cost increases, their bid prices have not kept up, rising only 2.7% in the past 12 months.”

Simonson noted that the producer price index for aluminum mill shapes, which are subject to a 50% tariff, soared 28% from November 2024 to last November. The index for steel mill products, which are also subject to a 50% tariff, rose 4.6%. But certain steel products climbed much more: the index for fabricated structural metal bar joints and rebar, a key building material, jumped 16.6%.

Association officials noted that the association’s 2026 Construction Hiring and Business Outlook Survey, conducted with Sage, found a majority — 53% — of contractors list materials costs as one of their top concerns for 2026. Other frequently mentioned concerns include economic slowdown or recession, listed by 62% of participants, and a variety of concerns about labor availability, quality and cost.

The survey also found only 24% of contractors said they had not been affected by tariffs. Forty percent of firms reported raising bid prices in response to actual or proposed tariffs, while 35% passed most or all tariff costs on to project owners, and 32% accelerated purchases to avoid paying prospective tariffs.

Association officials said the November price data and their survey results together show that tariffs are driving up construction costs. Officials urged the administration to quickly conclude trade agreements and other adjustments to bring materials costs back down.

“The frequent increases and announcements about prospective tariffs have pushed up the cost of construction and made owners hesitant to commit to projects,” said Jeffrey D. Shoaf, AGC’s CEO. “Contractors and owners alike need more certainty and fewer price shocks from tariffs to assure a healthy construction market in 2026.”

View producer price index data.

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