Nonresidential construction conditions hold steady in third quarter

Nonresidential construction activity was stable in the third quarter, according to Mortenson’s Q3 2025 Construction Cost Index.

The index, which examines eight major U.S. markets, found that contractors continue to report consistent bidding activity, and owners have greater confidence in advancing projects that were previously delayed or under review. Supply chains continue to stabilize, with pricing volatility easing across most major trades. 

Overall cost escalation is contained, though material and labor costs increased slightly. Labor availability remains stable nationwide. Although tariffs may briefly elevate prices in late 2025, freight costs are anticipated to stay low overall, with occasional temporary spikes caused by tariff pass-throughs and trade route changes.

“After months of wait-and-see due to tariff uncertainty, owners and developers have begun to move forward with projects and assumed higher costs for them,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “While the recent uptick points to strengthening planning activity, overall momentum remains tempered by broader economic headwinds.”