Construction costs and materials

Input costs outpace output prices, sustaining price-cost pressure.

Input costs for healthcare structures rose 7.9% in the year to August 2026 compared to 5.0% for output prices. At -2.8pp, this spread continues to signal price-cost pressure, though it does not measure realized contractor margins.

The input index excludes labor; this gap does not measure total project costs. When the same pattern emerged in 2021, bid prices caught up within a year. Owners budgeting 2027 starts should factor in further construction price escalation as contractors work to recover margin pressure.

Source: BLS, Producer Price Index. Quarterly averages through Q2 2026; August 13, 2026 release vintage. Both series rebased to Q4 2019=100.

Source: BLS PPI, 2019–2025 annual averages and August 2026 (released September 10, 2026). Spread calculated before rounding; inputs exclude labor.

Tariff-driven metal prices are pushing up costs and extending lead times: aluminum +27.3%, copper +20.9%, switchgear at 44 weeks.

Aluminum mill shapes (+27.3%) and steel mill products (+23.4%) remain the largest sources of cost inflation, both tariff-driven, both heavy in healthcare MEP scope, with copper and brass mill shapes rising to +20.9% off its July rate, and switchgear accelerating to +13.3%. Finishing materials have remained relatively stable, so the greatest pressure is concentrated in the areas where hospital projects are most exposed. Medium-voltage switchgear still runs 44 weeks (VAWN, August 2026) and standard generators 12-20 weeks (BuildVision, March 2026). Electrical packages should be ordered during design, rather than waiting until GMP.

Source: BLS, Producer Price Index (August 2026 data, released September 10, 2026). 12-month percent change.