Is This True? - The calm before the cost increase.

Sep 5, 2026, 7:00:00 AM

One Great Chart-1

This chart really tells the story of the slowdown in private commercial construction compared to the data center boom. As developers, we see anecdotal signs of how slow it is, like new general contractors contacting us every week to ask about upcoming work. We're hearing that the number of subcontractors bidding on a project is double or triple what it was a few years ago.

To me, what most indicates the slowdown in construction is that contractors are holding their prices despite what is going on with material costs. We aren't seeing fuel surcharges or steel cost increase pass-throughs…. yet.

So far:

Crude oil is UP 44% year over year
Polyethylene (PVP piping) is UP 15% year over year
Hot rolled coil steel is UP 54% year over year
Zinc (used in galvanized steel) is UP 37% year over year
Aluminum (windows, siding) is UP 26% year over year
Copper is UP 47% year over year

But there is some good news:

Eggs are DOWN 83%
Orange Juice is DOWN 32%.

Very little else is down, check it out here at Trading Economics.

A few factors might explain the current situation.

First, it takes time for increases in material costs to filter through the supply chain. Steel suppliers, for instance, may still be working through inventory or materials purchased at lower prices.

Second, suppliers, subcontractors, and contractors may be absorbing these cost increases out of concern that raising prices could cause them to lose jobs.

While construction costs have decreased in some markets, such as Texas and Florida, most markets remain stable with minimal increases. However, this stability is likely temporary. As commodity price increases flow through the system, construction costs will inevitably rise.

It's not uncommon for us to have a 24-month entitlement timeframe. A lot can happen in 24 months, and it would be crushing for a developer to invest years of time and money to get a project approved only to find out that construction cost increases killed a deal.

It's time for developers to include very healthy construction cost escalators because despite our stable construction market today, costs are going up.

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