Construction Cost Trends 2020-2026

The Big Picture

Construction and home improvement costs increased dramatically from 2020-2023, driven by pandemic-related supply chain disruptions and labor shortages. Costs have since stabilized but remain elevated compared to pre-pandemic levels. Key Statistics:

• Total increase (2020-2026): 30-40% depending on project type
• Peak inflation: 2021-2022 (15-20% annual increases)
• 2024-2026: Stabilization at 3-5% annual increases
• Current outlook: Costs unlikely to decrease; slow growth expected

Quick Comparison (National Averages)

Project	2020	2023	2026	Change
Roof Replacement	$7,500	$10,500	$10,000	+33%
HVAC System	$5,500	$8,000	$7,500	+36%
Kitchen Remodel	$20,000	$28,000	$27,000	+35%
Bathroom Remodel	$12,000	$17,000	$16,500	+38%

2020: Pre-Pandemic Baseline

• Stable pricing with normal 2-3% annual increases
• Strong housing market
• Adequate material supply
• Labor market balanced

2021: Supply Chain Crisis Begins

• Material cost spike: Lumber up 300%+
• Labor shortages: Many workers left industry
• Demand surge: Home improvement boom during pandemic
• Overall increase: 15-20%

2022: Peak Inflation

• Material costs remained elevated
• Labor costs increased 5-8%
• Strong demand continued
• Overall increase: 12-15%

2023: Beginning of Stabilization

• Lumber prices normalized
• Labor market stabilizing
• Demand cooling from peak
• Overall increase: 5-8%

2024-2025: Normalization

• Material costs stable
• Labor costs still rising (3-5%)
• Interest rates impacting demand
• Overall increase: 3-5%

2026: Current Market

• Market largely normalized
• Some labor pressures remain
• Regional variations significant
• Projected increase: 2-4%

Material Costs

Lumber:

• 2020: $350/1,000 board feet
• 2021 Peak: $1,700/1,000 board feet (+385%)
• 2026: $450/1,000 board feet (+29% vs 2020)

Copper & Metals:

• Increased 40-50% since 2020
• Supply chain more stable now
• Prices remain elevated

Concrete:

• Increased 25-30% since 2020
• Regional variations significant
• Transportation costs a factor

Labor Costs

Skilled Trades:

• Electricians: +25% since 2020
• Plumbers: +28% since 2020
• HVAC technicians: +30% since 2020
• General contractors: +22% since 2020

Why Labor Costs Stay High:

• Fewer young workers entering trades
• Retirement of experienced workers
• Competition from new construction
• Increased complexity of work

Expected Trends

Material Costs (2026-2028):

• Expected increase: 2-4% annually
• Lumber stable unless housing boom
• Metals tied to global markets
• Supply chains largely recovered

Labor Costs (2026-2028):

• Expected increase: 3-5% annually
• Shortage of skilled trades continues
• Wage pressure from other industries
• Training pipeline improving slowly

Factors to Watch

Could Increase Costs:

• Major natural disasters
• New tariffs on materials
• Economic boom increasing demand
• Energy cost spikes

Could Decrease Costs:

• Economic recession
• Housing market slowdown
• Immigration reform (more labor)
• Technological efficiency gains

Best Estimate for Planning

• Budget 3-5% annual increases
• Large projects: lock pricing with contracts
• Consider timing strategically
• Get quotes from multiple contractors

Timing Your Projects

Best Times to Start:

• Early spring (before peak season)
• Late fall (contractors need work)
• When you need it (delaying rarely saves money)

Avoid If Possible:

• Right after natural disasters
• Peak summer season
• During material shortages

Protecting Against Price Increases

• Get Fixed-Price Contracts

- Avoid cost-plus arrangements for large projects - Specify materials by brand/model

• Buy Materials Early

- For planned projects, buy materials now - Store properly if project is months away

• Lock in Labor

- Book contractors in advance - Get written quotes with validity period

• Consider Phasing

- Urgent work now, cosmetic work later - Allows time to save and compare

What NOT to Do

• Don't wait indefinitely for prices to drop (unlikely)
• Don't choose cheapest contractor without vetting
• Don't start without a detailed contract
• Don't assume 2020 prices will return

Data Sources

• Bureau of Labor Statistics Producer Price Index
• National Association of Home Builders
• Engineering News-Record Construction Cost Index
• CostSignals contractor survey data

Use Our Tools

Get current pricing for your location:

• All Calculators - Automatically adjusted for current market
• State Cost Comparison - See how your state compares

Related Analysis

• Home Repair Costs by State
• Roof Replacement Guide
• HVAC Replacement Guide