Rising Materials Costs, Longer Delivery Times and Soft Demand Squeeze Contractors; Association Urges Action on Tariffs and Infrastructure Funding
The producer price index for inputs to new nonresidential construction jumped 13.3% from October 2025 to October 2026, the most in more than four years, according to an analysis by the Associated General Contractors of America of government data released today. Association officials warned that rising materials and freight costs, longer delivery times and soft demand for most types of construction projects are squeezing contractors, making it difficult for firms to pass along price increases to project owners.
“Construction firms are experiencing ever-greater impacts from tariff- and Middle East turmoil as prices accelerate for metals, fuel and freight,” said Ken Simonson, the association’s chief economist. “In addition, lead times for steel and insulation have lengthened, making it harder for contractors to keep projects on schedule.”
To help contractors, owners, government officials and others understand what is happening to construction costs, lead times and labor available, the association has released a new edition of its Construction Inflation Alert.
The largest price increases affected petroleum products. The producer price index for diesel fuel, which reflects prices at the refinery or fuel terminal level, more than doubled over the past 12 months, rising 115.2% despite a decline of 4.6% from September. The index for liquid asphalt climbed 11.5% year-over-year. The index for truck transportation of freight rose 24.6%, an indication of the fuel surcharges contractors pay on thousands of deliveries.
Metals prices have shot up since tariffs of up to 50% were imposed in 2025. Prices jumped year-over-year by 32.9% for steel mill products, 23.3% for aluminum mill shapes and 23.9% for copper and brass mill shapes. Products that incorporate steel have also been affected: the index for precast concrete products, which have steel embedded in their shapes, increased 9.9% from a year earlier.
Construction firms are encountering lengthening lead times for structural steel, such as the beams and other steel shapes needed to erect building frames. Mineral wool insulation, used to protect interiors from fire, is also subject to longer delivery times.
Association officials urged public officials to address both the rising materials prices and soft demand for construction. Specifically, they urged the Trump administration to resolve trade disputes that have prompted many of the tariffs. And they urged Congress to restore full transportation funding for road and bridge projects before the current, partial extension expires on December 11. Association officials also urged public officials to avoid putting in place arbitrary limits on construction of important infrastructure projects, including technology infrastructure.
“Federal officials can help offset the pain of higher materials prices and the challenge of slower demand for many types of projects,” said Jeffrey D. Shoaf, chief executive officer of the Associated General Contractors of America. “Resolving trade disputes, restoring highway and transit funding and preventing limits on construction activity will help construction employers that are currently being squeezed by high prices and soft demand.”
View the producer price index data. View the association’s Construction Inflation Alert.