Capacity Crunch Defines Construction Market Outlook

Skanska has released its Summer 2026 Construction Market Trends Report, offering a fresh view of the forces shaping the US construction industry as it enters the second half of the year. 

The report finds that underlying demand remains stronger than expected, but growth is heavily concentrated in a small number of sectors. 

Data centres, infrastructure, power generation, advanced manufacturing, pharmaceutical production and select healthcare markets continue to draw significant capital investment.

Meanwhile office, retail, higher education and broader commercial development remain comparatively subdued.

A market split by sector

Data centre construction remains the standout performer within US commercial building activity. 

According to the report, data centres accounted for approximately 5.4% of private nonresidential building construction spending in 2025, up from roughly 1.7% in 2019.

Annual US data centre construction spending is expected to exceed US$100bn by 2030, more than double current levels, with the segment continuing to reshape where and how capital is deployed across the industry.

"As we move into the second half of 2026, the construction market is being defined less by concerns for lack of demand and more by the industry's capacity to deliver,” explains Steve Stouthamer, Executive Vice President of Project Planning at Skanska USA Building.
“Data centre, power, advanced manufacturing and life sciences investment continues to create significant opportunities, but labour availability, power constraints, equipment lead times and material costs are continuing to challenge owners and contractors. 

“In this environment, advanced planning and early procurement are increasingly critical to keeping projects on schedule and managing cost exposure."

Healthcare and higher education activity remains mixed nationally, varying by regional population growth and policy, while financing conditions continue to pressure certain private developments even as sectors linked to technology and infrastructure maintain stronger momentum. 

Power availability, skilled labor, municipal concerns and equipment lead times remain the key constraints on data centre development and other high-growth sectors.

Concurrently, strong demand for technical mechanical, electrical, and plumbing (MEP)  trades and specialised materials continues to drive higher pricing in markets with significant data centre, power, life sciences and advanced manufacturing activity. 

In geographic markets seeing high growth from technology sectors, the report says owners should anticipate construction pricing escalation remaining above historical averages over the next year.

Energy costs are compounding these pressures. US regular unleaded gasoline averaged approximately US$3.13 a gallon in July 2025, climbing to roughly US$4.50 a gallon amid Middle East supply disruptions before easing to near US$4.00 a gallon currently.

Diesel has followed a similar trajectory, while natural gas prices remain higher than a year ago, supported by strong LNG export demand and power generation consumption. 

For construction, elevated fuel costs continue to raise the cost of operating heavy equipment and transporting materials, while higher petroleum and natural gas costs are adding price pressure to asphalt, roofing products, insulation, PVC, plastics, coatings and other petrochemical-based materials.

Tariffs reshape materials pricing

Materials and metals markets remain highly dynamic amid an evolving tariff landscape.

 Steel, copper and aluminium prices remain elevated, with ongoing changes to Section 232 and Section 301 tariff policy adding continued uncertainty across construction supply chains.

 Structural steel demand remains particularly strong on the back of data centre and large-scale advanced manufacturing construction, while ongoing retaliatory tariffs between the US and Canada are expected to keep influencing lumber, cement, steel and aluminium costs. 

As near-term trade flows remain largely stable, evolving trade policy continues to create uncertainty for longer-term procurement and investment decisions.

Among the key tariff measures currently in effect:

• Section 232 tariffs of 50% now apply to steel, aluminium and copper
• A new 15% tariff applies to imported solar panels
• Canada faces a 50% Section 338 tariff on cement and plywood, effective 19 August
• Section 301 tariffs of 10-12.5% apply to goods from more than 60 countries over forced-labor concerns
• A new 25% Section 301 tariff applies to specific goods from Brazil

The knock-on effects are visible across the materials mix. Metals pricing continues to rise in nearly all categories.

 As the report shows, aluminium had eased following a Middle East ceasefire before climbing again as fighting resumed and shipping through the Strait of Hormuz was disrupted.

Nickel pricing is rising due to shipping disruptions out of Indonesia, the world's largest nickel producer. 

Concrete pricing continues to rise as well, driven mainly by higher energy, transportation and raw material costs for cement, gypsum and limestone, though escalation is not felt equally across all markets given the local nature of concrete supply. 

Insulation pricing is also climbing, with polyiso board seeing the steepest increases due to its dependence on petroleum. Major manufacturers have announced further price increases of 5-8%, layered on top of 6-12% increases announced earlier in the year. 

Gypsum and steel stud manufacturers have likewise announced price increases in response to rising material, energy and transportation costs and continued upward movement in the coiled steel market, although weak residential demand is helping to limit the actual impact. 

Lumber pricing has reached its highest level in four years, as previously low prices combined with tariffs on Canadian imports drove mill curtailments and closures that reduced supply even as housing demand remained weak; futures are trading lower, however, suggesting pricing could begin to soften in the coming months.

Equipment lead times stretch out

Capacity constraints across labor, power and equipment continue to challenge project delivery timelines. A handful of figures illustrate the scale of the pressure currently facing owners and contractors:

• Structural steel lead times currently run 40-50 weeks in high-demand markets
• HVAC equipment lead times can reach up to 52 weeks
• 2026 HVAC pricing is now forecast to rise 10-12%, revised up from an earlier 8-10% estimate
• Switchgear and pad-mounted transformer lead times are running between 60-100 weeks
• Generators of 2MW and larger are absorbing most available manufacturing capacity for the next two years

Lead times for generator units between 250KW and 1MW currently run 35-40 weeks, while units below 350KW are running 18-30 weeks, depending on manufacturer and project requirements. 

Prices for larger generators in the 100KW to 4MW range are expected to rise 8-10% in 2026 due to sustained demand and capacity constraints. 

Piping markets are also feeling the strain: PVC pricing has increased marginally following disruption to roughly 20% of global oil supply linked to the conflict in Iran and the Strait of Hormuz, while copper pipe pricing continues to climb on derivative tariff impacts and high-tech sector growth.

Carbon steel pipe pricing has levelled out over the past quarter, according to Producer Price Index data.

Skanska's Strategic Supply Chain Team continues to track manufacturer capacity, tariff developments and broader market conditions to help project teams anticipate cost and schedule impacts before they materialise. 

"Our Strategic Supply Chain Team maintains relationships with manufacturers and is closely monitoring the impact of tariffs on the supply chain," says Steve.

Skanska notes that advanced planning and early procurement remain the clearest levers available to project teams looking to protect schedule and cost certainty through the remainder of 2026.