Commercial Construction Costs 2026: The CB&C Margin Squeeze Index

How the index is built

Download the calculations (CSV)

How the CB&C Margin Squeeze Index is defined

The index subtracts the growth in what nonresidential contractors pay from the growth in what BLS measures them charging for finished buildings. Below zero means costs are outrunning prices.

CB&C Margin Squeeze Index (MSI): MSI = 12-month % change in the BLS output PPI for a building type minus the 12-month % change in the BLS PPI for inputs to new nonresidential construction (WPUIP231200). Units are percentage points. A negative value means input prices rose faster than building prices.

Wage-weighted MSI: MSI_w = output change minus (0.60 x input change + 0.40 x change in average hourly earnings, nonresidential building construction). The 0.40 labor weight is a CB&C assumption, because the BLS input index excludes labor. We also report 0.30 and 0.50.

Output prices come from the BLS building-type PPIs for new industrial, warehouse, school, office and health care buildings, plus the commodity index for all new nonresidential building construction (WPU801). BLS builds these indexes from model buildings: material and installation costs are updated quarterly by a cost-estimating firm and combined with contractor margin data collected monthly (BLS factsheet).

Input prices come from the BLS inputs-to-industry indexes, which weight producer prices for the goods, energy and services an industry consumes and exclude capital investment, labor and imports (BLS). Labor comes from BLS Current Employment Statistics (CEU2023620003) and the Employment Cost Index.

Commercial construction costs 2026: the August index reading and ranking

In August 2026 every building type shows a negative reading. Offices are least squeezed, warehouses most.

For all new nonresidential buildings, the August 2026 reading is -3.6 points: building prices rose 5.3% in 12 months while inputs rose 8.9% (BLS inputs data). The AGC reports the same 8.9% input figure.

Ranked from least to most squeezed: offices (-3.0 points), industrial buildings (-3.1), schools (-3.7), health care buildings (-3.9) and warehouses (-4.6). Against BLS's closer structure-type input indexes, the readings narrow to between -1.9 for offices and -3.5 for warehouses, because inputs to commercial, healthcare and educational structures rose 7.6% to 7.9%, less than the 8.9% for all nonresidential inputs.

With labor included at a 0.40 weight, the squeeze narrows to -2.1 points for all new nonresidential buildings, with a range of -1.5 for offices to -3.1 for warehouses. The 12-month sign would only turn positive with a labor weight of 0.97 or more, so the reading does not depend on the weight chosen.

Sensitivity check: does the squeeze survive other windows and weights?

The squeeze holds over 6 months, year to date and 12 months. It reverses only over 3 months, and over the full period since 2020 once labor is included.

The 3-month window (May to August 2026) is the exception, at +0.9 points: building prices rose 2.3% while inputs rose 1.4%. Two things drive it. The building PPIs step up when quarterly cost data are refreshed, and July 2026 was such a month. The energy component of inputs also fell 6.4% over the same three months.

Over the full period since January 2020 the result depends on labor. On materials and services alone, inputs outran building prices by 6.5 points. Hourly earnings rose only 32.3%, so any labor weight above 0.32 turns the cumulative spread positive, reaching +1.7 points at 0.40.

History puts the current reading in context. Since December 2015 the 12-month squeeze has been negative in 63 of 129 months. The low point was -21.1 in June 2021, during the pandemic materials spike. It then swung to +17.2 in March 2023 as building prices caught up. The current negative run began in May 2025 and is 16 months long, but it is much shallower than in 2021.

• Turner Building Cost Index: 1552 in Q2 2026, up 1.44% from Q1 2026 and 5.15% from Q2 2025 (Turner).
• Rider Levett Bucknall national index: 288.58 in Q2 2026, up from 285.47 in Q1 2026, a 1.1% quarterly rise (RLB).
• Mortenson Construction Cost Index: +1.58% for the quarter and +5.60% over 12 months, with materials +6.0% and trade partner work +5.2% over 12 months (Mortenson).
• JLL: final-cost indexes running roughly 5% year over year in mid-2026 (JLL).

These private indexes measure finished-building costs, like the BLS output PPIs, and cluster between roughly 5% and 5.60%, near the 5.3% BLS reading. None of them reaches the 8.9% rise in BLS input prices, which is consistent with the squeeze.

Component 1: output prices for new nonresidential buildings by type

Finished-building prices rose 4.3% to 5.9% by type in the 12 months to August 2026, with most of the 2026 gain arriving in January and July.

From December 2025 to August 2026, prices for all new nonresidential buildings rose 3.7%, led by health care buildings at 4.3%. Since January 2020, office building prices are up 54.4% and school prices 40.0%. Among specialty trades on nonresidential work, roofing contractors' prices are up 66.5% since January 2020 and plumbing and HVAC contractors' prices 34.9%.

The final demand construction index (WPUFD43), which BLS uses in its headline release, also rose 5.3% over the year. For context, the all-economy PPI for final demand rose 5.4% unadjusted over the same 12 months (BLS PPI release). Owners comparing quotes per square foot can read these trends alongside our planned guide to commercial construction cost per square foot.

Component 2: material and energy input prices

Input costs are being pushed by energy and metals. Concrete, gypsum and glass are close to flat.

Inside the 8.9% rise in nonresidential inputs, the energy component rose 49.7%, goods 8.8% and services 9.4% in the 12 months to August 2026. Diesel fuel (+77.8%) and refinery asphalt (+16.4%) carry the energy shock; the ABC analysis of the same data puts nonresidential input prices up 8.8%.

Metals sit under Section 232 tariffs. Proclamation 10947 raised steel and aluminum tariffs from 25% to 50% effective June 4, 2025 (Federal Register). Proclamation 10962 set a 50% tariff on semi-finished copper products effective Aug. 1, 2025 (Federal Register). Proclamation 11021 set full-value tariffs on aluminum, steel and certain copper articles at 50%, with certain other copper articles and derivatives generally at 25%, effective April 6, 2026 (Federal Register).

The price data show that steel mill products have risen 16.7% since May 2025 and 15.0% since March 2026. Aluminum mill shapes are up 44.3% since May 2025, and copper wire and cable 22.9% since July 2025. These are price moves after the effective dates, not measured tariff effects; energy costs, demand from data center and grid work, and exchange rates also move these series.

Electrical gear is also running hot: switchgear and industrial controls rose 12.3% and transformers 7.6% over the year, and since January 2020 they are up 82.9% and 84.2%. Fabricated structural metal (shop-fabricated steel) rose only 3.1% over 12 months despite the 23.4% rise in mill steel.

Component 3: labor cost

Construction wages are rising faster than the private sector, but about as fast as building prices. Labor explains little of the 2026 squeeze.

Average hourly earnings in nonresidential building construction reached $47.35 in August 2026, up 5.2% on the year; specialty trade contractors averaged $40.50, up 5.0%. AGC notes that the production and nonsupervisory measure for all construction rose 5.0%, against 3.3% for the private sector (AGC).

The Employment Cost Index, which holds job mix constant, shows slower growth. Construction wages and salaries rose 3.5% from Q2 2025 to Q2 2026, and total compensation rose 3.5%. The Q3 2026 ECI is due Oct. 30, 2026.

What the readings mean for owners and contractors

The data describe a squeeze on contractor spreads driven by metals and energy, not by labor. How it is shared depends on contract terms.

• For owners, the 5.3% rise in building prices to August 2026 is the measured price trend. The 8.9% rise in inputs is pressure that has not yet fully reached bids.
• Past squeezes closed through rising building prices, as in 2022 to 2023 when the spread swung from -21.1 to +17.2 points. The history describes that pattern; it does not forecast it.
• Exposure differs by trade package. Steel, copper, aluminum, switchgear and diesel-heavy sitework carry the most price movement. Concrete, gypsum, glass and insulation carry the least.
• In the AGC's July to August 2026 survey, 55% of respondents reported projects canceled, postponed or scaled back in the past six months.

Readers comparing contractor proposals can see how escalation clauses and allowances show up in pricing in our guide on how to compare construction bids. Spending volumes are covered separately in commercial construction spending.

Key findings

1. The BLS PPI for new nonresidential building construction (WPU801) rose 5.3% from August 2025 to August 2026 in the United States.^[2]
2. The BLS PPI for inputs to new nonresidential construction (WPUIP231200) rose 8.9% from August 2025 to August 2026.^[3][18]
3. The CB&C Margin Squeeze Index for all new nonresidential buildings was -3.6 percentage points in August 2026, the 16th straight negative month since May 2025.^[2][3]
4. New office building prices rose 5.9% in the 12 months to August 2026, the fastest of the five BLS building types.^[1]
5. New warehouse building prices rose 4.3% in the 12 months to August 2026, the slowest of the five building types, giving warehouses the deepest squeeze at -4.6 points.^[1][3]
6. Average hourly earnings of all employees in nonresidential building construction were $47.35 in August 2026 (preliminary), up 5.2% from August 2025.^[5]
7. The ECI for wages and salaries of private construction workers rose 3.5% from Q2 2025 to Q2 2026.^[6]
8. The PPI for No. 2 diesel fuel rose 77.8% in the 12 months to August 2026, the largest increase among 16 construction material and energy series tracked here.^[4][18]
9. Steel mill product prices rose 23.4%, aluminum mill shapes 27.3% and copper wire and cable 27.2% in the 12 months to August 2026.^[4][18]
10. Ready-mix concrete prices rose 2.3% and gypsum product prices 0.2% in the 12 months to August 2026.^[4]
11. Since January 2020, new nonresidential building prices have risen 46.3%, inputs to new nonresidential construction 52.8% and nonresidential building hourly earnings 32.3%.^[2][3][5]
12. Over the 3 months from May to August 2026, building prices rose 2.3% while inputs rose 1.4%, the only window in which the squeeze turns positive (+0.9 points).^[2][3]
13. Private cost indexes point the same way on building costs: Turner's Building Cost Index rose 5.15% year over year in Q2 2026 and Mortenson's index 5.60% over 12 months.^[19][21]

Summary for decision makers

• BLS output prices for new nonresidential buildings rose 5.3% from August 2025 to August 2026; by type, offices rose 5.9%, industrial buildings 5.8%, schools 5.2%, health care buildings 5.0% and warehouses 4.3%.
• BLS prices for inputs to new nonresidential construction rose 8.9% over the same 12 months, so the CB&C Margin Squeeze Index for all new nonresidential buildings reads -3.6 percentage points in August 2026.
• Every building type is in squeeze territory; warehouses show the deepest reading at -4.6 points and offices the shallowest at -3.0 points.
• Labor is not the main pressure: average hourly earnings in nonresidential building construction rose 5.2% in the year to August 2026, close to the 5.3% rise in building prices.
• The squeeze sign flips to +0.9 points only in the 3-month window (May to August 2026), when the July 2026 quarterly cost update lifted building prices 2.3%; the 6-month, year-to-date and 12-month windows all stay negative.
• The heat is concentrated in energy and metals: diesel fuel rose 77.8%, aluminum mill shapes 27.3%, copper wire and cable 27.2% and steel mill products 23.4% in the 12 months to August 2026, while ready-mix concrete rose 2.3% and gypsum products 0.2%.
• Since January 2020, new nonresidential building prices are up 46.3%, inputs 52.8% and hourly earnings 32.3%; with a 0.40 labor weight, the cumulative spread is +1.7 points in contractors' favor.

Frequently asked questions

Methodology

Source selection: all index figures come from BLS flat files downloaded on Oct. 3, 2026 (PPI industry and commodity files, the inputs-to-construction file, CES construction earnings and the ECI). Tariff facts come from proclamations published in the Federal Register. Private cost indexes (Turner, Rider Levett Bucknall, Mortenson, JLL) and trade association analyses (ABC, AGC) are cited for their published headline figures only and are used as cross-checks, not inputs.

Inclusion and exclusion: we used not seasonally adjusted series so that 12-month comparisons match BLS's unadjusted headline convention and building PPIs, which are published unadjusted. August 2026 PPI and CES values are preliminary. Materials were chosen for their weight in commercial building packages: structural and mill steel, concrete, masonry, gypsum, copper, aluminum, lumber, asphalt, glass, insulation and electrical gear. Third-party tables and charts were not reproduced. A press page from the Urban Land Institute ranked for the target keyword but could not be opened (security challenge), so it is not cited.

Conflicting numbers: ABC reports nonresidential input prices up 8.8% (its goods-based measure) while CB&C uses the goods-and-services index at 8.9%, which AGC also reports. Both are shown. The AGC 16.4% figure for liquid asphalt matches the BLS asphalt series (WPU058102); the broader asphalt and other petroleum products group was not used. Mortenson's release is titled 3rd Quarter 2026 but refers to second-quarter pricing; we cite it by release date.

Derived metrics: each percentage change is (later index / earlier index – 1) x 100, rounded to one decimal. Squeeze readings subtract rounded input changes from rounded output changes. The wage-weighted variant blends input and earnings changes with labor weights of 0.30, 0.40 and 0.50, which are assumptions. Every formula, input row and result is in derived_metrics.csv; scripts in the scripts folder reproduce all figures from the raw files.

Limitations: BLS building PPIs are model-based and include modeled costs plus margin, so the index measures spread compression rather than profit. The input index excludes labor and imports, so import prices affected by tariffs enter only through domestic producer prices. Hourly earnings exclude benefits and shift with job mix. Results are national; regional indexes exist but are not analyzed here.

Last updated Oct. 3, 2026 with August 2026 PPI data (released Sept. 10, 2026). The next scheduled update follows the Oct. 15, 2026 PPI release.

This report presents published data with its limitations. It is not legal, financial or investment advice.

Sources, ranked by quality

Tier 1: primary and official sources (16)

• [1] U.S. Bureau of Labor Statistics. PPI industry data for construction (pc.data.75.Construction flat file). June 2006 to August 2026. Accessed 2026-10-03.
• [2] U.S. Bureau of Labor Statistics. PPI commodity data for construction, incl. WPU801 and WPUFD43 (wp.data.80.Construction flat file). to August 2026. Accessed 2026-10-03.
• [3] U.S. Bureau of Labor Statistics. PPI inputs to construction industries (wp.data.80i.ConstructnInputs flat file). December 2014 to August 2026. Accessed 2026-10-03.
• [4] U.S. Bureau of Labor Statistics. PPI commodity data, current year file (wp.data.0.Current). to August 2026. Accessed 2026-10-03.
• [5] U.S. Bureau of Labor Statistics. Current Employment Statistics, construction hours and earnings (ce.data.20b flat file). to August 2026 (NAICS 2362). Accessed 2026-10-03.
• [6] U.S. Bureau of Labor Statistics. Employment Cost Index, current data (ci.data.0.Current flat file). to Q2 2026. Accessed 2026-10-03.
• [7] U.S. Bureau of Labor Statistics. Producer Price Indexes, August 2026 (news release USDL 26-1495). August 2026. Accessed 2026-10-03.
• [8] U.S. Bureau of Labor Statistics. PPI release schedule. 2026. Accessed 2026-10-03.
• [9] U.S. Bureau of Labor Statistics. PPI factsheet: New Office Building Construction, NAICS 236223. methodology, modified Sept. 16, 2025. Accessed 2026-10-03.
• [10] U.S. Bureau of Labor Statistics. Inputs to Industry Price Indexes. methodology. Accessed 2026-10-03.
• [11] Federal Register (via govinfo.gov). Proclamation 10947, Adjusting Imports of Aluminum and Steel Into the United States. June 3, 2025. Accessed 2026-10-03.
• [12] Federal Register (via govinfo.gov). Proclamation 10962, Adjusting Imports of Copper Into the United States. July 30, 2025. Accessed 2026-10-03.
• [13] Federal Register (via govinfo.gov). Proclamation 11012, Imposing a Temporary Import Surcharge. February 20, 2026. Accessed 2026-10-03.
• [14] Federal Register (via govinfo.gov). Proclamation 11021, Strengthening Actions Taken To Adjust Imports of Aluminum, Steel, and Copper. April 2, 2026. Accessed 2026-10-03.
• [15] U.S. Bureau of Labor Statistics. Employment Cost Index release schedule. 2025 to 2026. Accessed 2026-10-03.
• [16] U.S. Bureau of Labor Statistics. Employment Situation release schedule. 2025 to 2026. Accessed 2026-10-03.

Tier 2: trade bodies, market research, company data (6)

• [17] Associated Builders and Contractors. ABC: Construction Materials Prices Jump Again in August. August 2026. Accessed 2026-10-03.
• [18] Associated General Contractors of America. Construction Input Costs Climb 8.9% Between August 2025 And August 2026. August 2026. Accessed 2026-10-03.
• [19] Turner Construction Company. Second Quarter 2026 Turner Building Cost Index. Q2 2026. Accessed 2026-10-03.
• [20] Rider Levett Bucknall. RLB Construction Cost Report North America Q2 2026. Q2 2026. Accessed 2026-10-03.
• [21] Mortenson. Construction Cost Index: 3rd Quarter 2026. release of Sept. 8, 2026. Accessed 2026-10-03.
• [22] JLL. JLL report details rising construction costs in 2026. mid-2026. Accessed 2026-10-03.