The cost of building things in the U.S. is still trending upward, and at a rate greater than overall inflation, Skanska executives said in a recent webinar.

Interest rates, tariffs and now diesel costs spiking amid the war with Iran can be expected to raise costs, the executives said in their 2026 briefing on Thursday.

“We think cost escalation in construction is going to outpace U.S. inflation, and fairly significantly,” said Steve Stouthamer, Skanska’s executive vice president for project planning.

Skanska’s composite cost index in the past year has risen 6.8 percent, which Stouthamer called “very significant.” Most markets will see inflation between 4 percent and 6 percent this year, he said.

Spiraling prices for diesel and regular fuel can be expected to reverberate through the construction industry, the executives said. On Monday, diesel averaged $4.91 per gallon in Oregon, up 66 cents in the past week, according to AAA.

Tariffs continue to boost costs, despite a U.S. Supreme Court ruling striking down some of the Trump administration’s levies on trade.

“It’s just the reciprocal tariffs that have been struck down — all of these other ones remain,” said Rob Cantando, Skanska’s director of strategic supply chain.

The duty paid on aluminum has risen 3.5 times since early 2025 when President Donald Trump first instituted a series of tariffs.

“This really shows how aluminum pricing has escalated in the U.S. above the rest of the world,” Cantando said, adding that it’s sending prices upward for curtain wall and storefront extrusions.

Copper and other building materials also remain elevated.

It’s not all bad news on costs, however. Manufacturers are beginning to catch up on demand for some building systems, including heating and cooling units.

“We are expecting lead times for HVAC equipment and electrical gear to fall this year, and that’s really due to expansions — (manufacturers) continuing to ramp up,” Cantando said. “There have been significant investments by many manufacturers in this area.”

Costs for plumbing fixtures, HVAC and electrical gear should begin to moderate due to the elimination of some tariffs, he said.

Activity in the construction industry is being propped up by massive tech projects — data centers and other tech-related megaprojects, driven by demand for artificial intelligence, data and cloud restructure.

Data center developers are expected to build 8 gigawatts of infrastructure this year, totaling 32 million square feet. In monetary terms, that’s a spend of an estimated $40 billion to $80 billion.

An estimated 50,000 to 75,000 electricians are working exclusively on data center construction, Skanska officials said.

“A few years ago, we had a number of regions in the country that could probably hide from what the data center impact was doing, but now that demand is spreading across the country to locations where there is power capacity (and) land availability,” Stouthamer said. “Most markets around the country are feeling the impacts of the significant growth in the data-center market.”

In contrast, traditional residential and commercial construction remain soft, the Sweden-based global construction giant reported last month.

“Interest rates have led to reduction in commercial work,” Stouthamer said.

Recovery in housing and other private sectors is likely to be gradual, hinging on further interest rate reductions, improved consumer demand and reduced input costs, Skanska stated in its winter 2026 report.

“More optimal conditions may not materialize fully until 2027, but even that is highly speculative,” the report stated.

Skanska officials recommended contractors forecast budgets to the midpoint of construction, not just the procurement stage. Other cost-conscious measures they recommended include having flexibility in project specifications, early planning with project partners and producing more frequent budget updates.

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Brazing torches flashed and the sounds of sheet metal being drilled into place filled the air Friday in Northeast Portland, as the Associated Builders and Contractors‘ Pacific Northwest chapter hosted its annual Craft Championships for third- and fourth-year sheet metal and HVAC apprentices.

Three teams of two HVAC apprentices squared off to build functioning heating and air conditioning systems, while sheet metal apprentices competed individually to build heating and air conditioning ductwork from scratch in the shortest amount of time and with the fewest mistakes.

In the sheet metal competition, the winner was third-year apprentice Matthew Brunner, an employee of Portland-based ProTemp Associates, while third-year apprentice Calvin Nail, an employee of Hybrid Heating & Cooling in Cornelius, took home top honors in the HVAC division. Both Brunner and Nail next March will travel to Long Beach, California, to compete in the ABC national Craft Championships. There, they will take on other regional winners from around the United States.

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Northwest firms will have a big showing at this year’s American Society of Heating, Refrigerating and Air-Conditioning Engineers Technology Awards.

Each year, ASHRAE recognizes outstanding achievements by its members who have successfully applied innovative building design.

Of the six awards that will be given, four are going to firms in the Northwest, including Portland’s for its work on the Portland State University Academic and Student Recreation Center.

Interface used innovative energy conservation techniques on the building, including hydronic floor heating and a water source heat pump system, according to Mark Koller, who headed the project for Interface.

“It’s a great achievement to be nationally recognized,” he said. “Portland State was very good to work with for having aggressive energy goals.”

The other Northwest firms that will be awarded include Ecotope Inc. in Seattle, which will be winning two awards, and CDi Engineers in Lynwood, Wash.

The awards will be given to the recipients at the ASHRAE 2013 Winter Conference in Dallas, Texas, on Jan. 26.

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Roz Halstrom, the residential manager for in Vancouver, Wash., is seeing a pickup in business from a relatively small source: ductless heating and cooling systems.

“In the last three years, especially with the economy and stuff, they’re almost like a savior,” he said. “As far as our residential installations, they’re probably 50 percent of our business … it’d be pretty scary to think what would be there instead of them if they weren’t there.”

The wall-mounted heater/air conditioners circulate air into a home – no ducting required.

The for the past four years has pushed for increased use of ductless heat pumps via the . Advocates say the pumps not only cost less money, but also use less energy – and that is expected to become increasingly important as demand for energy grows.

“$12,000 to $15,000 jobs are now turning into $4,000 to $5,000 jobs,” Halstrom said. “That could be viewed as bad, but in this economy most of those houses wouldn’t be doing the larger jobs anyway.”

The effort started in 2008 when NEEA members and regional utility partners came together to discuss ideas for saving energy. The group discovered that if all of the region’s homes with out-of-date heating systems, like electric baseboard heating, were to switch to ductless heat pumps, 200 megawatts could be saved annually – enough energy to power 150,000 homes.

After a successful pilot program, group members began reaching out to international manufacturers who had been using the technology for years, and educating local contractors. Today, more than 600 HVAC contractors throughout Oregon, Washington, Idaho and Montana are now actively installing the pumps.

“This technology was developed in Japan in the 1970s,” said Becka Yates, a representative of both the NEEA and the Northwest Ductless Heat Pump Project. “If you travel internationally you see them everywhere. But our housing stock here in the U.S. tends to be very pocketed, so we have a lot of forced heating and air. It really wasn’t discovered until the utilities came together as a region to bring it together.”

A ductless heat pump’s internal workings are somewhat complicated, but its operations are simple. It essentially works like a refrigerator in the way it compresses air and circulates it. But rather than starting and stopping to control temperature, a ductless heat pump runs constantly; it slows and speeds up as needed.

Greg Douglas with , said the first ductless system his company installed was at the four-story, 40,000-square-foot Gadsby Building in the Pearl District.

“If you can take the stops and starts out of it – just like a car, each time it stops it has to use all the energy to get rolling again – if you can slow down you can save a lot of energy,” he said.

The quiet systems are ideal for commercial spaces, Douglas said. Ductless heat pumps now account for 15 to 20 percent of his company’s business.

The typical cost to install a ductless heat pump is between $3,000 and $5,000, but because they can reduce monthly heating-related energy consumption by as much as 25 to 50 percent, most utilities offer incentives. Yates said incentives typically cover 30 to 50 percent of the installation cost, up to $1,500.

It pays off for utilities.

“We are still projecting an increase in demand that, while individual customers have become more efficient in their use of energy over the past 20 to 30 years, nonetheless we’ve been growing – the population is growing,” PGE spokesman Steve Corson said.

Corson said that while the average amount of annual kilowatt-hours used by residential customers decreased nearly 17 percent from 1990 to 2011, the total load growth is expected to increase 45 percent by 2030.

Part of that demand is being fueled by air conditioning. Corson said that in 1990 approximately 30 percent of residential customers had air conditioners. In 2008, approximately 72 percent had them.

Devan Anthony, a home performance construction manager for Green Hammer, said the company opposes air conditioning. But it’s gaining business from ductless heating and cooling systems.

“We never install air conditioning,” Anthony said. “We just think it’s ridiculous for our climate. With (ductless heat pumps) you get AC for free.”

That’s because ductless heat pumps are constantly managing air circulation. Halstrom said his own home stays in the low 70s on days that are hotter than 100 degrees Fahrenheit.

Ductless heat pumps are not always ideal. Because they do not use ducting to carry the air, rooms that are far away or closed off by doors will not benefit. Units could be installed in multiple rooms; however, at up to $5,000 each, such a solution may lack feasibility.

But Yates said another benefit is the added level of comfort provided by ductless heating and cooling systems. Temperature is controlled by remote and NEEA’s own polling has shown that between 96 and 97 percent of customers are satisfied with the system, and more than 98 percent would recommend it to neighbors.

Halstrom said customers sometimes aren’t keen about the unit’s appearance on the wall, but any qualms are overcome by its performance.

“Typically, I walk in the door and ask, ‘What do you think?’ ” he said. “It’s funny because it seems like a lot of people, if they’re close to the remote control, grab it before they even answer and say, ‘We love it.’ ”

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Leaky air duct systems, both residential and commercial, can be surprisingly costly. Typical systems lose up to 40 percent of heating and cooling energy, according to the U.S. Department of Energy.

But a southwest Washington heating and cooling contractor is starting to seal ducts with a new adhesive product that the DOE lauds as “revolutionary.”

The product – – is an adhesive mist sprayed into pressurized duct systems that can seal thousands of gaps and cracks in just a few hours.

Leaders from , an HVAC company with locations in Vancouver and Longview, Wash., for several years followed development of the product at the DOE’s Lawrence Berkeley National Lab.

With growing incentives for energy-efficient upgrades and stricter building codes that require duct sealing in new construction, Entek decided about two months ago that it was time to invest in the equipment and purchase the product.

“This idea is 10 times better and more complete than anything you could do in the old days when you would do all of the sealing manually,” said Dennis Yalch, residential consultant for Entek.

To apply Aeroseal, technicians fog the duct system with a vaporized adhesive, essentially sealing the series of pipes from the inside, rather than painting on sealant from the outside.

The technicians monitor the sealing progress via a laptop throughout the process. So far, use of Aeroseal has led to a reduction in leakage from 40 percent down to 5 percent or better, according to Entek president Allan Shero.

Entek technicians have applied Aeroseal in a handful of homes in Oregon and Washington. This week, they sealed their own ducts at the Longview office in preparation for future commercial work.

“Green Spotlight” is a weekly feature on local firms’ best sustainable projects. To submit a project, email greenspotlight@djcOregon.com or call 503-802-7226.

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, a heating and cooling contractor with locations in Vancouver and Longview, Wash., in November won a leadership award from a national HVAC industry organization.

, a commercial contracting association based in Chicago, Ill. named Entek as the 2011 contractor of the year. Entek was recognized for its efforts in green HVAC solutions as well as its successful social media campaigning.

The company this year started an energy solutions division focusing on infiltration testing, duct leakage, particulate reporting, and thermal imaging. And industry demand is high for green services and more efficient technologies, according to Matt Todd, Entek sales and engineering manager

“We’re seeing a lot of interest,” Todd said. “Activity-wise it’s residential projects, but dollars-wise it’s commercial.”

Clark County, Wash. also lists Entek as a preferred contractor in its Community Development energy audit program for homeowners.

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