Construction materials prices spike as war in Iran rages on

Listen to this article

Construction prices surged in February with energy prices and raw materials as conflict in the Middle East disrupts supply flow. Contractors said the climb in materials prices will likely cause project delays.

Prices for materials such as oil, copper, lumber and steel rose before Feb. 28, when U.S. and Israeli forces launched airstrikes killing Ali Khamenei, the former supreme leader of Iran. As of Friday, the countries continue to trade fire amid diplomatic efforts.

U.S. construction input prices increased 1.3% in February compared to January, an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data showed. Nonresidential construction input prices also increased 1.3%.

Overall input prices are 3.1% higher than in 2025 and nonresidential construction input prices are 3.7% higher, ABC officials said.

Prices of all three of ABC’s energy categories increased as blockage to the Strait of Hormuz and attacks on energy sites in Middle East disrupt the flow of crude oil. Natural gas rose 10.9% and unprocessed energy materials increased 6%. Crude petroleum prices were up 4.7% in February, according to ABC’s producer price index.

“Construction materials costs surged in February due to significant increases in oil, copper, lumber and steel prices,” said Anirban Basu, chief economist of ABC, in a statement. “Notably, this data does not reflect the precipitous increase in oil prices, which are near $100/barrel as of this morning, caused by the conflict in Iran. That will put upward pressure on construction materials prices directly by raising diesel prices and, indirectly, by raising the cost of shipping other inputs.”

Input prices rose at a 12.6% annualized rate during the first two months of 2026, which could mean a headwind for construction activity over the next several months, Basu said.

“Major increases in the prices for diesel fuel and key metals occurred before the start of the Iran war,” said Ken Simonson, the chief economist of the Associated General Contractors of America. “The disruption of oil, natural gas, and aluminum supplies from the Middle East is pushing up construction costs further and causing owners to delay projects.”

Producer price index for aluminum mill shapes and steel mill products rose 39.1% and 20.9% year over year, AGC officials said. Fabricated metal bar joists and rebar rose 20% year over year, and copper and brass mill shapes increased 15.1% compared to last year.

AGC also noted diesel fuel prices jumped 20.3% from January, but prices were 3.1% higher than a year earlier. This cost affects truck transportation as costs of freight increased 3.1% over the past year.

With upward pressure from rising prices, contractors were concerned about the feasibility of ongoing projects.

“There is a limit to how many price increases the market can absorb before owners put projects on hold,” said Jeffrey Shoaf, the chief executive officer of AGC, in a statement. “Reducing uncertainty around tariffs and stabilizing supply chains would go a long way toward helping contractors keep projects moving forward.”