Turner Construction’s Building Cost Index rose to 1575 in the third quarter, up 1.48% from the second quarter and 5.49% from a year earlier. It’s the largest quarterly gain of the four quarters Turner’s current sheet lists, and each one has been bigger than the last.
Turner published the reading Oct. 13. The index tracks nonresidential building costs nationally and folds in labor rates and productivity, material prices and how competitive the bidding market is, so it moves with contractor pricing power as well as inputs. The index sheet still tags the third-quarter figure as a forecast, which is how Turner labels the current quarter.
Nonresidential building costs by quarter
The run since late 2025, per Turner’s index sheet: 1510 and 1.14% in the fourth quarter, 1530 and 1.32% in the first quarter of 2026, 1552 and 1.44% in the second, and 1575 and 1.48% in the third. Compound the latest quarterly rate over a year and it’s a little over 6%.
Turner’s full-year average rose 4.1% in 2025 and 3.9% in 2024. At 5.49%, the year-over-year change is the fastest pace since 2023, when the annual average rose 6.0%.
That’s not 2022, when the annual average jumped 8.0%. It’s also not the 1.8% and 1.9% years of 2020 and 2021 that a lot of owners still treat as normal. The index is up about 82 points from a year ago.
What Turner says is driving construction costs
Attilio Rivetti, the Turner vice president who compiles the index, pointed to data centers, mission-critical facilities, semiconductor plants, industrial work and big public and campus programs as the demand. He called mechanical and electrical labor a persistent constraint and said material costs and lead times are under renewed pressure.
Other third-quarter readings point the same way. Rider Levett Bucknall’s index rose 1.28% in the quarter, its fastest in two years. Two firms with different methods landing within a fifth of a point of each other makes the acceleration harder to wave off.
Why a bidding-condition index matters now
Turner’s index isn’t a pure input index. Because it counts competitive conditions, a market crowded with data center and chip work can push it up even when commodity prices flatten. That’s the case Rivetti is describing: the constraint is trade capacity, especially electricians and pipefitters, more than steel or copper.
It also explains why the number can keep climbing while some contractors report thinner margins. Turner prices what owners pay, and in a market where the mechanical and electrical subs are booked, the premium lands with whoever controls that labor.
For owners carrying 2027 budgets built on 2025’s 4% escalation, the math has moved. At the current pace, a project priced in mid-2026 and bid in mid-2027 carries closer to 6% escalation than 4%, and the mechanical and electrical packages are where that shows up first.