Stable national cost growth reflects varied market conditions as specialized demand and competitive bidding reshape construction markets
MINNEAPOLIS, Sept. 10, 2026 /PRNewswire-PRWeb/ -- Non-residential construction costs remained broadly stable in the third quarter of 2026, but underlying market conditions continue to vary by market, trade and project type as strong demand in specialized sectors coincides with increased competition across other portions of the U.S. construction market, according to Mortenson's latest Construction Cost Index report. Costs increased 1.58% on average during the quarter and are 5.60% higher than one year ago across the markets Mortenson tracks.
The following quarterly average price changes were observed in the eight markets Mortenson tracks: Chicago (+2.20%), Denver (+1.37%), Milwaukee (+0.60%), Minneapolis (+2.86%), Phoenix (+1.21%), Portland (+1.20%), Salt Lake City (+1.47%) and Seattle (+1.71%). Minneapolis experienced the highest quarterly increase among tracked markets.
According to the report, non-residential construction conditions remained broadly stable through the first half of 2026, although cost pressures varied significantly by market, trade and project type. Strong investment in large-scale and infrastructure-intensive projects continues to sustain demand for specialized labor and materials in select markets, while softer demand across portions of the commercial and institutional market continues to create competitive bidding opportunities as trade partners actively pursue available work.
"Construction costs continue to move higher, but the market is far more nuanced than it was just a few years ago," said Clark Taylor, vice president of estimating at Mortenson. "We're seeing steady conditions overall, yet demand associated with large-scale projects continues to create pressure on skilled labor, electrical capacity and certain material categories. At the same time, increased competition in other segments is creating opportunities for owners who engage early, plan strategically and remain flexible throughout procurement and construction."
Labor costs continued to increase during the quarter, supported in part by previously negotiated union agreements in several markets. Electrical trades remain among the industry's most constrained resources, while strong demand for electrical systems and metal-intensive scopes has elevated costs for materials such as copper, structural steel and reinforcing material. Tariffs, energy costs and geopolitical disruptions continue to contribute to pricing and sourcing uncertainty.
Supply chains remain generally stable compared with recent years, although procurement challenges persist in select electrical infrastructure categories. Power transformers, high-voltage circuit breakers and other power-distribution equipment continue to face extended lead times, particularly for utility and other large-scale infrastructure projects. These constraints remain concentrated in specialized project types rather than broadly affecting the construction market. Meanwhile, evolving tariff policies and geopolitical factors continue to influence material pricing and availability.
Based on current market data, observations and industry insights, Mortenson expects construction activity to remain healthy, with cost pressures increasingly concentrated around projects requiring significant electrical infrastructure, specialized labor and metal-intensive materials. Early planning, disciplined procurement and close collaboration with project partners remain key strategies for managing risk and capturing value in today's market environment.
Mortenson tracks and reports on eight metropolitan areas in the U.S., including Chicago, Denver, Milwaukee, Minneapolis, Phoenix, Portland, Salt Lake City and Seattle. The Mortenson Construction Cost Index is calculated quarterly by pricing representative non-residential construction projects in various metropolitan areas. It is part of a portfolio of industry insights and market studies provided by Mortenson. The Construction Cost Index is available to download at www.mortenson.com/cost-index.
About Mortenson
Mortenson is a U.S.-based builder, developer, manufacturer, and engineering services provider serving commercial, institutional, infrastructure, and energy markets. With operations across the U.S., the company brings together integrated planning, design, construction, digital, and operational expertise to help customers navigate complexity, reduce risk, and deliver high-performing assets that create lasting value for their businesses and communities. For additional information, visit www.mortenson.com.
Media Contact
Richard Kendall, Mortenson, 1 6193462084, [email protected], https://www.mortenson.com/
SOURCE Mortenson
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