The producer price index for inputs to new nonresidential construction rose 8.9% from August 2025 to August 2026 as conflicts in the Middle East and steep tariffs on key materials led to rising prices that are contributing to construction project delays, according to new analysis of government data by the Associated General Contractors of America.

Association officials said the rising materials prices, along with higher labor costs, are making it harder for many projects to pencil out, prompting some developers to put planned construction on hold.

“Construction firms are being squeezed by tariff- and war-induced materials cost increases, even as they boost wages to attract personnel,” Ken Simonson, the association’s chief economist, said in a news release. “Those cost increases, according to our latest survey, are a major reason project owners are cancelling, postponing or scaling back projects.”

The largest price increases affected petroleum products, along with metals that are subject to tariffs of up to 50%, AGC reported. The producer price index for diesel fuel, which reflects prices at the refinery or fuel terminal level, jumped 77.8% from August 2025 to last month. The index for liquid asphalt rose 16.4% year-over-year.

Metals prices also rose steeply over the past 12 months. Prices climbed year-over-year by 27.3% for aluminum mill shapes, 23.4% for steel mill products, and 20.9% for copper and brass mill shapes.

More than half—55%—of respondents to the association’s recent survey reported having projects canceled, postponed, or scaled back in the past six months. One-third of respondents attributed the disruptions to increasing costs. In addition, 13% cited lengthening or uncertain completion times, while 10% pointed to changes in demand or need due to tariffs and 6% listed changes in demand or need due to Middle East conflict. The association conducted the survey in July and August in conjunction with NCCER and released the results on Sept. 3.

Wages for construction workers have also been accelerating, while overall private sector wage gains are moderating, Simonson noted. The government reported on Sept. 4 that average hourly earnings for production and nonsupervisory employees, a category that covers most craft workers and office workers who aren’t supervisors, increased by 5.0% from August 2025 to August 2026, while the same measure for the entire private sector rose 3.3%, the least in more than five years.

Association officials called on Congress and the Trump administration to take steps to address rising construction costs. Those steps include resolving trade disputes that are prompting many of the new tariffs and implementing a more rational approach to workforce development that includes greater funding for construction education and training programs, as well as additional lawful pathways for people to enter the country and temporarily work in construction.

“As firms pay more to address labor shortages and materials prices continue to climb, they are caught between pricing themselves out of the market or performing work at a loss,” AGC CEO Jeffrey D. Shoaf concluded. “Rising materials prices and a lack of real federal commitment to construction workforce development are acting as a brake on economic activity that could, if left unaddressed, have significant consequences for the broader economy.”