Contractors are likely to pass more of their cost increases onto owners during the rest of the year, according to JLL’s 2026 U.S. Construction Perspective midyear update.

Materials prices have increased 6.4% year over year, with contractors passing on about 3.5% of the increase in their final prices. JLL expects bid prices to begin closing the difference during the remainder of the year.

Final-cost indices, including contractor margins, are already about 5% higher than a year ago. About three-quarters of contractors expect their profit margins to remain even or increase during the rest of the year.

Tariffs on metals, lumber, machinery and equipment are a major source of inflation in construction. Multiple materials are exposed to tariff regimes, with structural steel, aluminum and some additional products facing rates of 50%.

Copper is up 36% year over year, aluminum has increased 45%, and U.S. hot-rolled coil steel is up 27%. Geopolitical factors such as the war with Iran are adding to cost pressures.