Nonresidential construction input prices climbed 3.2% in 2025 compared with the previous year, largely because of tariff-related pressures, according to an analysis by the Associated Builders and Contractors (ABC) of new U.S. Bureau of Labor Statistics Producer Price Index data.
Input costs include the full range of expenses builders face — materials, labor, energy and professional services. When residential construction is included, the overall increase for 2025 was 2.8%.
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Despite the annual rise, ABC noted a modest -0.7% decline in December, offering a brief reprieve after months of escalation.
“Construction materials prices posted a welcome decline in December, yet key inputs are still experiencing rapid escalation,” said ABC Chief Economist Anirban Basu.
Basu pointed to metals and electrical components as the primary culprits behind the yearly spike.
“This is especially true for materials most exposed to tariffs. Copper wire and cable prices, for instance, jumped an incredible 4.6% in December and are up more than 22% year over year, and prices for primary nonferrous metals are up nearly 62% over the past 12 months,” he said.
Energy markets showed mixed movement. In December, natural gas prices rose 34.8% and unprocessed energy materials increased 5.5%, while crude petroleum fell 2.7%. On a year-over-year basis, natural gas finished 2025 up 8.8%, unprocessed energy materials dropped -7.4%, and crude petroleum declined -14.8%.
“Prices for commodities less exposed to tariffs, like asphalt or crushed stone, will likely remain tame in the coming months due to soft demand for construction services,” Basu said. “While that may limit increases in overall materials prices, trade policy will continue to put upward pressure on certain materials.”
Even with higher input costs, contractor sentiment has not deteriorated dramatically. ABC’s Construction Confidence Index shows 7 in 10 contractors expect profit margins to remain stable or improve over the next two quarters.
Industry analysts say firms are adapting through earlier purchasing, contract escalation clauses and greater use of domestic suppliers where possible. However, projects heavy in electrical and specialty metals remain vulnerable to further tariff shifts.
Economists warn that while December’s dip was encouraging, it does not signal a long-term trend. Large infrastructure and manufacturing projects scheduled for 2026 could still face budget revisions if trade policy tightens again.
Smaller subcontractors are particularly exposed, as they have less ability to stockpile materials or absorb sudden price jumps. Many are reworking bids to include contingency buffers and more frequent price updates from suppliers.
Originally reported by New Jersey Business.
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