Construction input prices have climbed for the third consecutive month, driven by rising costs of key materials, including natural gas, steel, copper, and lumber. The March price increase of 0.5% overall, and 0.6% for nonresidential inputs, signals continued volatility in the industry, according to data from the U.S. Bureau of Labor Statistics analyzed by Associated Builders and Contractors (ABC).

Year-over-year, input prices have risen by 0.8%, and since February 2020, they have soared by more than 40%. These increases reflect the mounting impacts of tariffs, which have contributed significantly to the sharp price hikes. This marks the third straight month of price surges, said Anirban Basu, ABC’s chief economist.

“Construction input prices increased at a rapid pace for the third consecutive month in March and have now risen at a 9.7% annualized rate through the first quarter of 2025,” Basu said. “The emerging effects of tariffs are glaring in the March data release.”

The rising costs, driven in part by tariffs, are causing significant challenges for contractors and owners as they approach the second quarter of 2025. The uncertainty surrounding tariffs is making it harder to make purchasing and pricing decisions for new projects, according to the Associated General Contractors of America (AGC).

“Lumber and metals prices shot up in March, while contractors’ inboxes are bulging with ‘Dear valued customer’ letters announcing further increases for many products,” said Ken Simonson, AGC chief economist. “Rapid-fire changes in tariffs threaten to drive prices higher for many essential construction goods.”

With price volatility on the rise, contractors are increasingly rushing to lock in material prices early to minimize risks. Michael O’Reilly, vice president at Rider Levett Bucknall, a New York-based construction consultancy, noted that contractors are proactively discussing procurement strategies.

“The latest PPI data indicates one of the largest monthly increases that we have seen in the past 36 months,” said O’Reilly. “We are advising clients to consider additional, separate contingencies depending on the stage of the project and the potential exposure to risk.”

The ongoing price increases have now extended for three months, a trend not seen since September 2023. As of the first quarter of 2025, construction input prices are increasing at a 9.7% annualized rate. If these price escalations persist, they could lead to delays and cancellations of projects, Basu warned.

“While contractors remain busy for the time being, according to ABC’s Construction Backlog Indicator, this pace of input price escalation, coupled with rising uncertainty, will cause projects to be delayed and canceled if it persists for any meaningful length of time,” Basu said.

The AGC has urged the Trump administration to reconsider new tariffs, especially until more market certainty can be established regarding the effects of those already in place.

“Our members are trying to deliver the best value for the public and private sector clients they serve,” said AGC CEO Jeffrey Shoaf. “But it is hard to deliver that best value when you have no idea how much you are going to have to pay for many of the materials required to build projects.”

Originally reported by Sebastian Obando in Construction Dive.