After a few years of whiplash, construction costs are getting boring again, and that’s the good news. Rider Levett Bucknall’s second-quarter report pegs North American cost inflation at roughly 1% for the quarter, a pace the firm describes as stable and predictable rather than the supply-shock spikes of the recent past.
What the cost report shows
The national construction backlog indicator rose to 8.8 months, propped up by a flood of data centers plus infrastructure, healthcare, and education work. A backlog near nine months means contractors have visibility and pricing power, which tends to keep costs firming even when the pace is moderate. Transportation and fuel expenses came in as the top source of project cost pressure for the quarter, a reminder that logistics, not just materials, moves the number.
Why the regional spread matters
National averages hide a lot. Honolulu led annual cost growth at nearly 6%, with Phoenix around 5.3% and Miami close to 5%. Meanwhile Chicago sat at 1.4% and Dallas near 3.9%. That’s a huge gap, and it means an escalation assumption that fits one market can be badly wrong in another. A developer pricing a tower in a hot Sun Belt market like Raleigh, where Kane is building The Strand, is working with a different cost curve than one in a slower Midwest metro.
The steadier backdrop is welcome after the volatility of recent years, but steady doesn’t mean cheap. RLB frames the quarter as healthy stabilization, with costs still grinding up about a point every three months. For anyone carrying a long project schedule, a 1% quarterly climb compounds. It’s just easier to plan around than a surprise.