By Lou Hirsh

CoStar News

March 13, 2025 | 1:00 P.M.

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Trade groups said recently enacted and pending trade tariffs could significantly raise U.S. construction material and service costs that have already increased this year in several categories. (Bloomberg via Getty Images)

Construction material costs climb

Construction material prices posted notable increases in February from year-earlier levels, as some building industry groups warned of more soaring costs ahead resulting from ongoing trade tariff escalation.

February’s overall U.S. producer prices — involving all goods and services and which often affect consumer prices — were essentially unchanged from the prior month but rose 3.2% from a year earlier, the Labor Department reported Thursday.

Construction industry trade groups pointed to considerable jumps in prices for crucial building materials, with several tied to recent trade tariff increases imposed by the U.S. on goods coming from Canada, Mexico and China. The Trump administration this week continued to exchange tariff increases and threatened hikes with those countries, along with members of the European Union.

The construction groups noted steel mill products jumped 2.7% from the prior month in February, with copper and brass products rising 1.8% and aluminum products increasing 1%. Diesel fuel, used in construction trucks and equipment, climbed 2.3% as lumber and plywood costs rose 1.7%.

The Associated General Contractors of America trade group noted prices for material and services used in non-residential construction rose 0.5% from the prior month in February, after a 0.7% monthly gain in January. Another group, Associated Builders and Contractors, said overall construction material and service-related costs for all types of projects were up 0.3% from a year earlier but were 41% higher than February 2020.

“It’s a bad sign that construction costs have been rising significantly even before most of the Trump administration’s tariffs have taken effect,” Ken Simonson, the AGC’s chief economist, said in a statement Thursday. “Now that many tariffs that hit construction materials are in effect, with more measures pending, construction costs are likely to rise much more.” 

Large cities lead US population growth

Population increases for the nation’s largest metropolitan regions outpaced overall U.S. growth as of mid-2024, fueled by factors such as international migration, according to the latest Census Bureau report.

The government Thursday said high-density metropolitan areas overall gained nearly 3.2 million people to reach a total of 293.9 million as of July 1, 2024, amounting to a 1.1% increase from a year earlier. The U.S. population at large topped 340 million for an annual gain just under 1%.

“While births continue to contribute to overall growth, rising net international migration is offsetting the ongoing net domestic out-migration we see in many of these areas,” Census Bureau demographer Kristie Wilder said in a statement. She said nearly all of the nation’s 387 large metropolitan areas had positive net international migration between 2023 and 2024.

The Census Bureau said some major metropolitan regions that posted overall population declines earlier in the decade experienced population gains from 2023 to 2024. Those included New York, Washington, D.C., and the San Francisco Bay Area.

Still to be seen are the potential effects of recent immigration enforcement policies on population growth, which in turn can affect demand for housing and other types of real estate. The Brookings Institution research group estimated in December that the U.S. in 2025 could see net out-migration as high as 650,000 as more people leave than enter the country.

Jobless claims edge lower

Initial claims for U.S. unemployment insurance declined in the week ended March 8, though some analysts said continued claims have recently been rising, and initial claims still don’t reflect ongoing job reductions at federal government agencies.

The Labor Department said there were 220,000 initial claims, down 2,000 from the prior week’s revised level. Continued claims for the week ended Feb. 22, the most recent to be reported, reached about 2.3 million, up from 2.1 million in the comparable week of 2024.

The Trump administration since January has targeted more than 200,000 federal job cuts nationwide, though some of those face legal challenges. During the past week, national news outlets reported planned cuts as high as 45,000 at the Internal Revenue Service, 80,000 at the Department of Veterans Affairs and 1,000 at the National Oceanic and Atmospheric Administration.

The White House this week announced plans for 1,300 job cuts at the Department of Education, along with plans by the department to terminate leases on buildings in several cities, including New York, Boston, Chicago and Cleveland. That department has been targeted by President Donald Trump for complete dismantling.