ConstructConnect warns material costs this summer

ConstructConnect told clients on May 21 that material costs are likely to move higher this summer, extending a run of pricing pressure that has already narrowed margins for contractors and added uncertainty for home-improvement and building projects. The warning came in the company’s spring economic webcast, where its economists tied the outlook to weaker business confidence, a softer labor backdrop, tariff-policy uncertainty and supply-chain strain. The company also pointed to lumber and freight-linked inputs as areas to watch. Fastmarkets added a day later that pallet production costs were rising, giving another signal that distribution expenses are feeding into the broader cost picture. ### Which costs did ConstructConnect single out? ConstructConnect said lumber was one of the clearest materials at risk of higher prices this summer. In its broader spring 2026 outlook, the company has already said rising costs and tariff uncertainty were weighing on residential construction and other segments of the market. The May 21 webcast also highlighted pallet production and distribution pressures. That matters because pallets sit inside the logistics chain for building products, appliances and other job-site inputs, even when they are not a line item in a contractor’s bid. ### Why are pallets showing up in a construction-cost discussion? Fastmarkets reported yesterday that wooden pallet prices posted their largest increase in years, driven by rising lumber costs and what it described as a successful buyer education campaign. The publication said buyers were facing higher pallet production costs at the same time supply-chain challenges continued to affect procurement. Fastmarkets reported in March that low-grade lumber prices — a main input for pallets — had risen 27% since the first week of January, outpacing framing lumber gains. It also said diesel costs and tighter trucking capacity were adding to freight expenses, particularly in the Gulf Coast market. ### How does tariff uncertainty fit into the outlook? ConstructConnect said tariff-policy uncertainty was one of the reasons it expects material prices to rise this summer. In a March 16 forecast, Chief Economist Michael Guckes said the company had downgraded parts of its 2026 construction outlook because macroeconomic conditions, including tariff uncertainty and rising costs, were weighing on activity. ConstructConnect also reported earlier this year that construction material prices rose 6.2% across 2025, citing Bureau of Labor Statistics producer price data, and said tariffs on major trading partners were a major factor in that increase. The company said input prices were rising faster than bid prices, a pattern that can leave contractors absorbing more of the increase. ### What does this mean for residential work? Residential projects are among the areas most exposed when lumber, freight and distribution costs rise together. ConstructConnect’s spring 2026 forecast said single-family housing starts were expected to rise 1.3% this year, while multifamily starts were projected to be nearly flat, with financing costs still a constraint. The company’s warning does not point to a single product shortage. Instead, it describes a cost environment in which multiple inputs — wood products, pallets, trucking and tariff-sensitive materials — can all push estimates higher over the summer building season. ### Where can readers track the next update? ConstructConnect has posted its 2025 Spring Construction Economic Outlook webinar and its spring 2026 forecast materials on its website. Fastmarkets continues to publish updates on pallet and lumber markets, including its pallet-cost report published on May 21.