Mid-year Residential Construction Costs
New Construction Slows, But Remains Stable
National housing starts declined modestly in Q2, down approximately 4.6% year-over-year. Most of that pullback is concentrated in multifamily projects, while single-family construction, particularly custom homes, has held steady.
In our region, we’re seeing encouraging consistency. Supply chains are operating smoothly, and construction timelines have returned to predictable norms. For homeowners planning a new build, this creates a more stable and efficient environment than we’ve seen in prior years.
Material Costs: Stable With Some Upward Movement
After several years of sharp swings, most construction material costs have stabilized, with the overall index for residential building goods up just 1–2% year-over-year, a welcome return to historical norms and predictable trends.
Producer Price Index (PPI)
That said, certain categories are seeing renewed upward pressure:
Key Commodity Pricing
While some material and labor costs are still rising, the overall construction index remains relatively stable. This is largely due to broader normalization across most building categories, many of which have seen little or no year-over-year change.
Even so, we continue to monitor pricing closely. Key categories such as steel and concrete still carry some uncertainty, and modest increases are expected in the second half of 2025.
Lumber: Up 7–8% year-over-year, rebounding from last year’s price floor.
Concrete: Continues its gradual climb, rising about 2.5% since Q2 2024.
Steel: Up approximately 5% year-over-year, driven in part by tariff impacts.
Glazing/Glass: Relatively flat, with prices up only 1–2%.
Tariff Impacts: Steel and Aluminum Costs Edging Higher
Recent tariff changes are starting to affect pricing for certain building materials, particularly those involving steel and aluminum components. Import costs on structural and fabricated steel have increased, contributing to an estimated 5–6% year-over-year rise in steel prices.
While domestic supply has helped offset some of the impact, continued shifts in global trade policy could add further pressure in the months ahead. We continue to monitor these trends closely to support informed timing and budgeting decisions.
Washington State Labor Costs
Labor Costs: Up, But Manageable With Planning
Labor remains a key factor in construction pricing, particularly in Washington State. Construction wages are up roughly 5.5% year-over-year, driven by continued demand and an aging workforce. This trend is likely to persist.
While construction wages are rising, these increases are expected given market conditions. As this trend continues, early planning and efficient project management remain key to staying on budget and minimizing impact.
The Bottom Line
Construction costs in 2025 are rising, but at a steady and manageable pace. While labor and material prices continue to trend upward, the overall environment is far more stable than in recent years. At Blu Water Homes, we help clients navigate these changes through thoughtful planning, clear communication, and trusted partnerships. For those considering a custom home, today’s market offers a solid window of opportunity, especially with the right team in place.