Construction Materials Drive US Cost Escalation Amid Shift in Pressure

US construction cost pressures are shifting from labor to materials, according to Cushman & Wakefield's latest Construction Insights for Global Occupiers report. Construction-related commodity prices rose 13.3% year-over-year (YOY), with aluminum leading the increases at 40.9%, followed by copper base scrap at 39.3% and nonferrous metals at 38.5%. This marks a significant acceleration from last year, more than 4.7 times the rate recorded in the same period.

The increase in commodity prices is driven by tariffs, metals supply constraints, and strong demand for materials from data centers and infrastructure projects. At the same time, labor cost growth has moderated, creating a different construction inflation environment compared to recent years. 'The pressure on construction costs hasn't disappeared, but its source is changing,' said Tyler Paytas, Global Head of Programs & Projects at Cushman & Wakefield.

Data centers and infrastructure projects are driving construction activity, while traditional commercial real estate sectors remain subdued. Contractors working on data center projects reported an average backlog of 11.0 months, compared to 8.5 months among contractors without data center exposure. Infrastructure construction backlog reached 10.1 months in June, up 7.9% from a year earlier.