Trade Disputes, Middle East Conflict Driving Up Construction Costs

After three years of falling or stable prices, the cost of construction materials has risen sharply over the past six months.

The Producer Price Index for Construction Materials stood at 363.253 in May 2026, according to data from the U.S. Bureau of Labor Statistics. The index has consistently risen since November 2025, when it was at 338.556. That month marked the end of a roughly three-and-a-half-year stretch when the cost of construction materials was either falling or flat. The index last peaked in May 2022 (353.015) during the height of the COVID-19 pandemic rebound.

The May figures mark a record high for the index. The index uses 1982 as its base year, set at 100. Much of that increase is being driven by spikes in copper, steel, and aluminum. The global price of copper has risen nearly 25% since last November, while the price of structural steel is up 15.6% since May 2025. Aluminum mill shapes have seen an even larger jump of 48.8% year over year.

The rising cost of materials drove up the producer price index for new nonresidential construction 8.4% from May 2025 — the largest year-over-year increase since 2021. Those costs could climb further as officials at the Associated General Contractors of America (AGC) warn that many contractors have not yet passed along those price increases to their customers.

“Runaway prices for key construction inputs are pushing up costs twice as fast as the 4.2% rise in the consumer price index,” said Ken Simonson, chief economist for AGC. “Contractors are being hit by a double whammy of rising materials prices and much lower increases in what they can charge for new projects.”

Association officials credited conflicts in the Middle East and ongoing trade disputes with driving up construction material costs at a time when demand is relatively soft for most projects outside of new data centers. “There are steps federal officials can take to address rising materials prices and help contractors manage these growing costs,” AGC CEO Jeffrey Shoaf said. “Providing certainty on tariff levels will help with materials prices, while passing a new transportation bill by the end of September will help provide greater certainty for construction demand.”