Uncertainty in the construction market has caused some projects to pull back following federal policy changes, but others have forged ahead and many that have are seeing improved bidding results against new budget targets, according to Skanska’s summer construction market trends report.
“We attribute this mainly to market uncertainty, with the tradeoff being some reduction in opportunities in many markets,” the report said. “Further, many commodity and complex product manufacturers are managing tariff uncertainty with strategic adjustments to their supply chains, helping to mitigate cost impacts.”
Construction spending fell 0.4% month-over-month in June to $2,136.2 billion. That was 2.9% below the June 2024 estimated amount of $2,199.8 billion. For the first half of the year, spending was 2.2% below the same period in 2024.
Industry observers have been keeping a close eye on materials costs in light of evolving tariff policy.
“Halfway into 2025 it appears the dramatic impact of tariffs that many economists were predicting have not materialized,” said Skanska. “While it’s true that the ‘Liberation Day’ tariffs announced on April 2 have been on hold or replaced with lower tariff rates, significant tariffs remain in the construction market — most notably on steel and aluminum. However, even with 50% tariffs on these metals, we have not yet seen a dramatic uptick in the pricing of finished products in the marketplace.”
Concrete prices are up 9% year-over-year, although the tariff impact in this category is minor, as about three-quarters of the cement used in the United States is produced domestically, according to Skanska.
World crude steel production was down 5.8% in June, while U.S.-produced crude steel rose 4.6%. Skanska said structural steel pricing continues to trend steadily upward, with wide flange pricing up nearly 10% since the start of the year. Copper prices have surged to record highs over tariff-related concerns and aluminum prices are also continuing to rise. Nickel prices, however, remain stable, said Skanska.
Despite recent tariff changes on Canadian lumber, overall pricing in the category continues to hover at lower levels. The report pointed to lower housing starts and declining homebuilder sentiment amid high interest rates as an explanation for this trend and it noted prices could increase in the coming months.
Finally, drywall prices have not experienced additional price increases following previously reported increases earlier this year. Prices going forward will largely depend on tariffs with Canada and Mexico, Skanska noted.
The report warned that tariff pricing impacts could still be on the horizon as buy-ahead activity was elevated before duty implementation, which likely helped manufacturers delay the impact of higher costs.
Overall construction unemployment remained unchanged in July at 3.4 percent.
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