Construction prices are rising, borrowing costs remain high and labor is in short supply — all are conspiring to constrict growth in the sector, even as activity is strong in some real estate sectors, according to Skanska’s “Winter 2026 Construction Market Trends Report.” Leveraging its Composite construction Index, the report delivers in-depth analysis and critical insights into the current state of the construction industry, highlighting the impact of tariff exposure, labor shortages, and sector performance.
“As we begin 2026, the U.S. construction market is navigating a period of cautious transition, with modest overall growth expected amid high borrowing costs, material inflation, and persistent labor shortages,” said Steve Stouthamer, executive vice president of project planning at Skanska USA Building. “While high-growth sectors such as data centers, semiconductor and life science projects continue to drive activity, traditional residential and commercial markets remain softer, highlighting the uneven momentum shaping the year ahead.”
Total construction starts were up 2.6% in December 2025 to a seasonally adjusted annual rate of $1.24 trillion, driven by a 16.3% increase in nonbuilding starts, with substantial gains in highways and bridges and miscellaneous nonbuilding projects. Year over year, nonresidential building starts are up 4% by dollar volume but are down about 6% by square footage.
Construction costs remain volatile. Hot-rolled and cold-rolled coil prices are up nearly 45% since mid-2025. Metal studs experienced 10% to 15% price increases in January following November adjustments, while wide flange steel is $100 per ton higher than October 2025, fueled by tariffs and strong demand from data centers and manufacturing.
Copper futures reached above $6 per pound in early January before easing slightly as global inventories rose. Copper wire pricing is up 25% to 30% from January 2025, reflecting continued demand from electrification, renewable energy and AI-related projects. Similar to both steel and aluminum, imported fabricated copper products are subject to a 50% tariff rate.
The Midwest Premium, a regional surcharge (including tariffs) added to the London Metal Exchange (LME) base price for aluminum delivered to the U.S. Midwest, surged from $500 to $2,200 per ton, prompting manufacturers of aluminum products to announce price increases in late 2025 and early 2026. Aluminum wire prices, for example, are up nearly 20%.
Labor shortages persist. In December 2025, the construction industry lost 11,000 jobs, netting only 14,000 jobs added across the year for a minimal increase of 0.2%. The industry’s unemployment rate was 5%, down 0.2% from December 2024.
Sector performance is highly uneven. The standout growth drivers are data centers and large tech-related megaprojects, powered by ongoing demand for AI, cloud and data infrastructure. By contrast, traditional residential construction and cyclical commercial segments, such as retail, office and manufacturing facilities, are softer.
