Builders warn costs rising

A fight thousands of miles from U.S. job sites is now showing up in drywall quotes, delivery schedules, and payroll plans for American housing projects. Builders told ConstructConnect this week that suppliers are warning of shortages, longer lead times, and fresh price increases tied to the Iran conflict and shipping uncertainty. (canada.constructconnect.com) The chain is simple: when conflict threatens oil fields, tanker ports, or sea lanes near the Persian Gulf, fuel gets pricier and ships get rerouted. Baker Donelson said the 2026 Iran war raised fears around the Strait of Hormuz and pushed carriers to add conflict surcharges, longer routes, and higher delivery costs for industrial commodities. (bakerdonelson.com) Construction feels that faster than most industries because it buys heavy, low-margin stuff that is expensive to move even in calm times. ConstructConnect wrote in March that diesel rose from $3.89 a gallon in the March 2 Energy Information Administration reading to $4.17 a gallon in AAA’s March 5 daily report, and heavy bulk materials are especially sensitive to that jump. (canada.constructconnect.com) Shipping problems were already hanging over 2026 before this latest warning from builders. Freightos said in its January 27 outlook that carriers were still treating Red Sea disruption as a live risk and keeping extra ships in service as insurance against more route chaos. (freightos.com) That means a builder pricing an apartment project in Ohio is not just paying for lumber, steel, pipe, or tile. The builder is also paying for war-risk insurance, detours around threatened waterways, and the extra days a container spends at sea before a subcontractor can install anything. (bakerdonelson.com) The timing is rough because U.S. homebuilding was already squeezed by trade policy before the Iran shock. The National Association of Home Builders said the Commerce Department imposed a 10% tariff on all timber and lumber imports on September 30, 2025, on top of duties that pushed the total levy on Canadian lumber to 45%. (nahb.org) Housing was not entering 2026 with much cushion to absorb another hit. The National Association of Home Builders said in February that the year would bring economic policy uncertainty, a softer labor market, and continuing affordability problems even before this new round of supply-chain stress. (nahb.org) Builders are also warning that cost spikes do not just raise sale prices at the end of a project; they can kill projects before they start. ConstructConnect’s spring 2026 forecast cut expected U.S. construction starts growth to 1.6% and said higher costs and tariff uncertainty were already delaying planned investment. (canada.constructconnect.com) That is why contractors are talking about layoffs even when the country still needs more homes. If quotes expire faster, materials arrive later, and lenders demand bigger contingencies, smaller builders often pause hiring first because payroll is the only cost they can cut immediately. That link between rising costs and delayed projects is consistent with industry surveys from the Associated General Contractors, which said contractors entered 2026 more worried about materials prices and the broader economy. (news.agc.org) The end result is a housing market where every extra dollar at the port or pump gets multiplied by financing costs, labor scheduling, and buyer affordability. The National Association of Home Builders said in February that 65% of U.S. households could not afford a median-priced new home in 2026, so even small cost increases can push more buyers out and make delayed projects harder to revive. (eyeonhousing.org)