Skanska Report Highlights 2025 Construction Market Trends Amid Tariffs and Rising Material Costs

Skanska has released its Summer 2025 Construction Market Trends Report, offering analysis on the impacts of tariffs, supply chain conditions and material pricing on the U.S. construction industry.

According to the report, total construction starts rose 16% in June to a seasonally adjusted annual rate of $1.33 trillion, largely driven by manufacturing and data center projects.

Tariffs introduced Aug. 1 are expected to have limited impact on overall material pricing since 17 of the 25 targeted countries account for less than 1% of U.S. imports. However, tariffs affecting materials from the European Union, Mexico and Canada may influence project costs, unless exempt under the United States-Mexico-Canada Agreement.

Material costs remain volatile. Prices for copper pipe have climbed more than 30% this year, while copper wire has risen up to 17%. Wide flange steel prices increased nearly 10% in 2025, including a $40-per-ton jump in June. Concrete costs are up 9% year over year, while mineral wool insulation rose 8% in July.

Labor conditions show steady but slow growth. Construction unemployment held at 3.4% in July, with year-over-year employment up 1.2% but only 2,000 jobs added that month.

Skanska’s Composite Construction Index reported a 3.4% annual increase in costs for the 12 months ending in August, nearly a full percentage point higher than ENR indices. Key trades rose 4.5% on average.

Supply chain lead times remain mixed. HVAC equipment prices are expected to rise 10-12% in 2025, while large data center generators still face waits of up to two years despite improvement. Electrical gear lead times are falling but remain extended, with switchgear, switchboards and transformers up 8-10% in cost.

Skanska noted that uncertainty continues to define the market, with tariffs and pricing trends shaping how projects are planned and executed across the industry.