Construction costs are expected to rise faster during the second half of 2026 as trade policy, labor shortages and strong demand for data center construction continue to pressure project budgets, according to JLL's 2026 Construction Perspective: U.S. Mid-year Update.
The report found contractors working on data center projects carry average backlogs of 12.2 months, compared with 8.3 months for contractors without data center work. JLL said the increased demand is driving higher costs and longer schedules in many markets.
Final construction cost indices are currently running about 5% higher than a year ago, with additional increases expected later this year. JLL also cited tariffs on steel, aluminum and copper, higher global energy prices and continued labor shortages as key factors affecting project costs.
According to the report, construction employment growth has slowed to 0.6% in 2026, while supply-constrained labor markets are expected to expand from 61% of U.S. metro areas today to 72% by 2027. JLL said owners planning projects over the next several years should account for continued cost pressures and limited contractor capacity during procurement.
