Construction cost escalation is speeding up again. Rider Levett Bucknall’s National Construction Cost Index rose 1.28% in the quarter to July, reaching 292.28, the biggest single-quarter increase the firm has recorded in two years. The index stood at 288.58 in April and 285.47 in January.
Year over year, RLB puts national escalation at 4.45%, up from 4.37% last quarter. That’s not a spike. It is a reversal of several quarters in which cost growth held roughly flat.
RLB construction cost index by city
The city spread is where the Q3 report earns its keep. Across the 18 U.S. markets RLB tracks, annual changes from July 2025 to July 2026 ran from 1.74% in Chicago to 6.49% in Honolulu.
- Honolulu: 6.49%
- Phoenix: 5.19%
- Portland: 4.89%
- New York: 4.84%
- Minneapolis: 4.78%
- Dallas: 3.84%
- Chicago: 1.74%
Most of the remaining markets clustered between 4.1% and 4.6%, including Boston at 4.45%, Denver and Miami at 4.55%, and San Francisco and Washington, D.C., at 4.33%. In Canada, Toronto came in at 4.33% and Calgary at 4.20%.
Chicago’s number stands out. Its index barely moved between January and April, which means owners there are seeing roughly a third of the escalation that Phoenix or Portland contractors are pricing. Phoenix’s 5.19% lines up with what other local trackers have been reporting as data center and chip work competes for the same trades.
A two-speed construction market behind the cost numbers
RLB North America president Paul Brussow described the quarter as a two-speed market, and the report’s own data backs him up. Total construction put in place ran at a $2,157.6 billion annual rate in July, 0.5% below June and 3.8% below a year earlier, a decline Exchange covered when Census released the July spending data. Inside that total, data center spending was up 57.2% while manufacturing fell 21.7%, its sixth straight monthly drop. Single-family residential was down 6.5%.
Inputs are doing the rest. RLB cites overall construction input costs up 8.9% from a year earlier, with diesel up 77.8%, aluminum mill shapes up 27.3%, steel mill products up 23.4% and liquid asphalt up 16.4%. The diesel figure is the same PPI line we flagged when refinery diesel crossed $6.45 a gallon.
Labor is tight. RLB’s summary puts construction employment at 8,359,000 in August and industry unemployment at 3.1%, the lowest in 26 years. The report’s labor page still cites July’s 3.7%, so readers should match the month to the figure.
What the Q3 cost report means for bids
RLB’s indicative cost tables show how wide the range has become. Prime office space in New York runs up to $1,010 a square foot at the high end. A general hospital in San Francisco tops out at $1,600, and Portland’s hospital range starts at $1,050. Warehouses in Austin and Dallas still start around $75 a square foot.
The firm’s advice to owners is to stop budgeting off national averages and bring contractors in early. That’s standard consultant language, but the Chicago-to-Honolulu spread makes the case on its own. The same Q3 2026 report that shows 1.74% in one city shows nearly four times that in another. RLB’s Q3 crane count, published a week earlier, shows where that activity is landing.