Turner Building Cost Index Q2 2025: Costs Continue to Rise
Turner Construction has released its Q2 2025 Building Cost Index, and the message is clear: construction costs continue to climb. The index, a widely followed benchmark that tracks labor, material, and productivity trends in the U.S. nonresidential building market, shows a steady upward trajectory through mid-year. While the pace of increases has moderated compared to the extreme spikes seen during the pandemic-era supply chain crisis, the cumulative effect is keeping pressure on project budgets nationwide.
According to Turner, the cost environment is being shaped by several converging factors. Labor remains the largest driver, with skilled trades still in short supply across nearly every sector. Wage escalation is particularly acute in high-demand markets like healthcare, advanced manufacturing, and data centers, where competition for specialty workers continues to push rates higher. Materials, while showing some easing in categories such as lumber and steel, remain volatile due to tariffs, energy prices, and ongoing global supply chain disruptions. Inflationary pressures and financing costs also remain a concern, adding to the overall weight on owners and contractors.
The index reflects not just rising inputs, but also productivity challenges. Projects are more complex, involving advanced building systems, prefabrication, and technology integration, all of which require greater upfront coordination. While these innovations can drive long-term efficiency, they are adding to short-term costs as the industry navigates learning curves and new workflows.
Despite the rising cost trend, Turner notes that owners and contractors are finding ways to adapt. Prefabrication and modularization are increasingly being deployed to offset labor shortages and reduce waste. Early engagement with trade partners and strategic sourcing are helping mitigate exposure to volatile materials. Contractors are also leveraging digital tools to forecast cost impacts with greater precision, allowing stakeholders to make informed decisions earlier in the project lifecycle.
Looking ahead, Turner expects cost pressures to persist through the remainder of 2025, though not at crisis levels. Continued demand for data centers, manufacturing facilities, and healthcare projects is keeping backlogs healthy and competition for resources high. While some sectors may see moderation, overall building costs are expected to trend upward into 2026. For owners, this means budgeting conservatively, locking in contracts early where possible, and working with construction partners to explore innovative delivery models that balance cost, risk, and schedule.
The Q2 2025 Turner Building Cost Index reinforces a central reality of today’s construction market: costs are not receding to pre-pandemic levels, and adaptation is the new normal. Firms that embrace proactive planning, technology, and alternative delivery methods will be best positioned to navigate this environment and deliver value despite the headwinds.
