Construction costs nationally rose 2.7 percent in the second quarter of this year as commodities, including lumber and copper, grew more expensive, according to a national cost index.

Costs rose 5.4 percent compared to a year ago, according to the Mortenson Cost Index, which is maintained by the Minneapolis-based contractor.

“Construction starts rebounded across most sectors in May and saw solid growth in June, with particular strength in manufacturing and data center construction,” Dodge Construction Network Associate Director of Forecasting Sarah Martin stated in a news release. “However, risks remain elevated that construction starts will be more subdued in the back half of the year alongside ongoing uncertainty over trade policy and the broader economy.”

In the Portland market, the cost rises were muted. Costs rose 0.6 percent in the second quarter and 3.3 percent for the past 12 months.

“Over the last four quarters, really, the Oregon-Southwest Washington market has stayed relatively flat,” said Gabe Fox, chief estimator for Mortenson in Portland. “One exception was there was some ripple in the first quarter of (2025) with the announcement of the tariff information. The industry reacted and in preparation for those upcoming tariffs. So far that reaction for our market hasn’t held into the second quarter.”

Contractors have largely not yet seen large cost increases due to tariffs, Fox said, but they’re watching for signs of price jumps in imported materials.

General contractors have “a hyper awareness” of tariff costs and are working with clients, but also urging them not to overreact to tariff effects that haven’t showed up yet, Fox said.

Data center work is buoying contractors in Oregon and other regions, Mortenson officials said.

“The growth in the data center market — it’s definitely booming, and it’s going to continue to boom for quite a while,” Fox said. “Here, Oregon is definitely an attractive place for that type of development, with readily good, clean power and power that’s priced competitively within the market for those companies.”

Fox said he expects the multifamily and hospitality sectors to pick up construction activity in coming months.

Commodities prices continue to show volatility, according to the Mortenson Cost Index. Lumber has risen 30 percent in price in the past two years, followed by increases in copper pipe (up 20 percent), plywood (up 12 percent) and copper wire (up 10 percent).

Lumber — much of which is imported from Canada — is especially vulnerable to tariffs. Tariffs on Canadian lumber jumped to 35 percent in August.

“It is a concern,” Fox said. “From a construction material standpoint, lumber would be one of those concerns because of where it’s coming from, and those negotiations that are still happening.”

Copper prices tend to be driven by demand, which has been strengthened by data center and electrical infrastructure work, Fox said.

Nationally, construction labor costs have risen 4.9 percent during the past 12 months, Mortenson’s cost index found.

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