By Roland Murphy for AZBEX
A new market report on construction costs in the United States shows inflation may be “leveling off.”
In his introductory column in the Rider Levett Bucknall Q1 2026 Quarterly Construction Cost Report, RLB President North America Paul Brussow said, “Construction cost inflation is beginning to level off. Quarterly increases are holding near 1%, translating to an annualized rate just above 4%. While still elevated (most of the pressure coming from materials costs) compared to historical 3% per annum, the consistency suggests that the industry may be settling into a more predictable environment, one where owners and developers can recalibrate expectations and plan investments with greater confidence.”
New variables, including shifting tariff policies, ongoing foreign-born labor issues and federal planning make long-term planning complex.
RLB’s report examined market data through mid-Q1.
Brussow foresees the industry entering a period of “recalibration.” Construction activity rebounded slightly at the end of the year, largely led by single-family housing and renovation, and public infrastructure investment continues to see steady growth. Private nonresident spending, however, has cooled.
The Architectural Billings Index fell at the beginning of the year, showing fewer projects coming into the development pipeline.
Increases in materials costs are also increasing pressure, and tariffs have driven the largest increases in steel, aluminum and copper prices since 2022.
The report shows construction put in place in December 2025 was estimated at a seasonally adjusted rate of $2.17T, which was 0.3% more than the November estimate and 0.4% less than December 2024.
Phoenix vs. Other Markets
RLB tracks annual percent changes in construction costs on a quarterly basis for 18 markets around the U.S.
Phoenix saw the third-largest annual percent change in Q1, rising 5.12%.
Miami recorded the largest gain, coming in at 7.74%. Chicago had the lowest percent change at 2.89%.
Across the examined markets, the annual percent change averaged 4.575%.