EAP Insight, our in-house Design & Construction team's research platform, is pleased to share our Q1 2026 Construction Market Update.  Our quarterly report examines the current cost environment, labor dynamics, regional and sector divergence, and emerging risks shaping the construction landscape.

Q1 2026 marked an inflection from the muted 2025 backdrop, with positive momentum across the primary indicators (ABI, CBI, Starts) — but emerging inflationary headwinds from war-related fuel and materials pressure, persistent tariffs, and a re-tightening supply chain are putting renewed pressure on costs.

Key Takeaways from Q1:

Construction Pricing: After a highly competitive 2025, costs are inching higher again. Materials rose +1.2% QoQ / +5.9% YoY led by metals (Aluminum +28.6% YoY, for instance), with PPI for construction materials posting +6.0% YoY for the fourth consecutive month. Labor costs held flat QoQ, helping to partially offset material increases. The window for "lowest pricing in years" is shortening — now is the time to procure.

Regional Trends: The West transitioned to "expansionary," with ABI jumping +12% QoQ to 50.6, foreshadowing increased starts in 12–24 months. The South posted a softer ABI (49.4) but continues to lead the country on backlog at 9.4 months, supporting shovel-ready execution in 2026. The Midwest gave back Q4's gains, and the Northeast remains the underperformer.

Sector Trends: Non-building (+37.9% QoQ in starts) and data centers continue to drive aggregate spending. Residential bifurcated sharply: Multifamily starts inflected higher (+15.3% MoM, +6.1% YTD), marking a real reversal after a multi-year decline—though starts remain ~27% below their 2022 peak. Single-Family contracted (-5.3% MoM, -14.1% YTD).

Things to Watch: Middle East conflict drove the largest MoM diesel increase since the 1990 Gulf War (+38%); steel and aluminum tariffs remain at 50% with a temporary 10% blanket tariff sustaining cost pressures across the materials; and the Global Supply Chain Pressure Index rose to 0.68, its highest value since early 2023.

View the full report here: