July 17, 2025

‘Construction is thriving in an oasis'

Image data from RLB report [enlarge]

Seattle trailed seven U.S. cities in construction cost increases from April 2024 to April 2025, but topped other western cities year-over-year.

Rider Levett Bucknall's most recent construction costs report paints a picture of the uncertainty so many in the industry face right now.

On one hand, the Quarterly Construction Cost Report for the fourth quarter of 2025 points to some encouraging signs: stabilizing costs, a sharp drop in industry unemployment, and a recent Associated Builders and Contractors report stating 60% of contractors anticipate increased sales over the next two quarters.

At the same time, architectural billings are down for the third consecutive month, the U.S. Department of Commerce reported construction-put-in-place declined in April, and with so much uncertainty over tariffs and federal funding decisions, many public and private sector building plans are being put on hold.

“Essentially, construction is thriving in an oasis, offering hope while the broader economy searches for its own,” Paul Brussow, president of Rider Levett Bucknall North America, said in the report released earlier this month by the construction consultant. “When the conditions ahead are unfamiliar, we recommend construction leaders keep a close eye on the changes around them and consult the best available data to make well-informed decisions.”

HIGHER ED HIT HARD

Nationwide, the report says higher education investment has been hit especially hard in recent months, and private equity firms have been reluctant to borrow with interest rates so high.

“While plenty of money is available, many investors are looking for greater clarity from the administration before they take on more risk,” the report said. “This means (private equity) investment across all sectors is in a wait and-see holding pattern.”

Key segments like data centers and industrial manufacturing continue to drive growth throughout North America, the report said.

INFLATION SLOWS IN SEATTLE, OVERALL

Construction cost growth stabilized overall between the first and second quarters, according to the report, with an average increase of just 0.15% between January and April. Year-over- year cost changes are also moderating, dropping from a 5.42% increase in April 2024 to 4.4% in April 2025 on average nationwide.

Seattle continued to move lower in the year-over-year comparative cost index even as inflation continued to slow nationwide.

At the same time, Seattle's year-over-year increase of 4.48% was the highest of all of the western cities surveyed, ahead of Las Vegas, (4.40%), Los Angeles, (3.57%), Phoenix, (4.42%), Portland (4.35%) and San Francisco (3.78%).

The western cities surveyed had an average year-over-year cost increase of 4.17% between this April and last. (Note that RLB considers Denver, Austin and Dallas to be part of its central region.)

The report said desert markets like Phoenix and Las Vegas are recalibrating to match supply with demand, and predicted a possible new wave of housing and infrastructure development in California following regulatory shifts there.

Zeroing in on the second quarter, Seattle's 0.99% cost increase is down slightly from the 1.07% inflation reported in the first quarter, and the 1.17% reported in the fourth quarter of 2024.

Seattle's second quarter inflation increase was among the lowest reported in the western cities (and the U.S. as a whole), with only Phoenix's 0.89% increase coming in lower, quarter-over-quarter. San Francisco's 1.48% was the highest increase reported among the western cities for the second quarter and the second highest in the nation.

Looking at the broader North American picture for the quarter, the highest inflation increases came in Chicago with a 1.65% increase quarter-over-quarter, Toronto with 1.60%, and Calgary with 1.49%.

Washington, D.C., had the smallest quarter-over-quarter cost increase, up 0.74% over last quarter.