Market Overview
With Q4 results finalized, the outlook for commercial construction across the greater Puget Sound region is coming into focus. The overall picture remains steady.
Material pricing has continued to level out compared to the volatility of recent years. Costs are still elevated in certain categories, but the pace of escalation has slowed. Total construction input costs were up about 6.2 percent year over year, driven largely by metals and electrical systems. Quarter over quarter movement was relatively flat, which signals the market is finding more stability. Project demand is also holding. Healthcare, infrastructure, and tenant improvement work continue to keep commercial activity moving across the region.
Construction Material Costs
Material Costs: Where We’re Seeing Movement
Most major materials saw relatively small shifts this quarter, with cost increases concentrated in specific trades rather than across the board.
Here is how key inputs shifted year over year:
In short, most material pricing remains manageable. The areas still seeing pressure tend to be electrical systems and metal related scopes, while energy driven inputs have eased.
Tariffs: Still a Factor in Key Trades
Tariffs continue to shape pricing, particularly within metals and electrical equipment. Steel and aluminum imports remain subject to tariff structures that support higher domestic pricing. Similar measures affecting certain copper products and derivatives are also influencing electrical equipment and distribution systems.
One area we are keeping an eye on is lumber. Pricing is currently stable and even slightly down year over year, but recent tariff increases on imported softwood lumber could influence costs over time. We have not seen a significant market reaction yet, but it is something we are continuing to monitor as we move further into 2026.
Labor Market Conditions
Labor continues to be one of the most consistent contributors to overall project cost.
National construction wages rose about 4.3 percent year over year, according to the Employment Cost Index. This reflects steady labor cost growth across the industry and falls within a fairly typical range historically.
Here in the Puget Sound region, workforce availability remains tight. Electricians and specialty trades are in particularly high demand. That demand continues to put pressure on subcontractor pricing and scheduling. While wage escalation has stabilized compared to the post pandemic period, labor availability remains one of the most important factors shaping project planning.
Outlook for 2026
As we move further into 2026, the commercial construction environment remains steady and predictable.
Material pricing has stabilized in many categories, though metals and electrical systems continue to see upward pressure. Energy inputs have eased, helping offset broader cost movement, while labor remains the most consistent cost driver. For most commercial projects, early coordination still makes the biggest difference. Aligning trades, locking procurement timing, and planning strategically all help maintain cost confidence.
If you have a project on the horizon and want to talk through timing, budgeting, or strategy, our team is always available. We are happy to share perspective or walk through what we are seeing in the market as you plan next steps.
Based on our local data, these are the trends we’re seeing for material procurement. Most material procurement timelines have returned to more stabilized durations after significant procurement volatility and supply chain disruptions over the last couple of years. Still, many lead times are extended relative to historical norms for some specialty items, fixtures, and equipment.
