Report: Construction Sector Encounters Rising Costs

Key Information

• Florida’s construction industry constituted $97 billion or 5.7% of the state’s GDP in 2024.
• Construction costs are influenced by inflation, trade uncertainties, and supply chain disruptions.
• The industry is projected to grow by 7% in 2025, focusing on mixed-use and infrastructure projects.
• Significant material cost increases include Wood (8.2%), Steel (5.1%), Concrete (4.7%), and Drywall (6.2%).
• Tariffs on critical materials—25% on Mexican goods and 35% on Canadian lumber—are impacting costs.
• Homebuilders report an average increased construction cost of $10,000 per home.

The cost of construction is rising across the U.S., with Florida seeing significant impacts where the construction sector accounted for $97 billion, or 5.7%, of the state’s gross domestic product in 2024, according to Florida TaxWatch.

Factors contributing to the surge in construction costs include inflation, uncertainties surrounding trade agreements, and supply chain disruptions, as detailed in the report from the government watchdog and taxpayer research institute.

In Florida, the construction industry is slated for a growth of 7% in 2025, particularly targeting mixed-use and infrastructure developments, states Florida TaxWatch President and CEO Dominic Calabro.

“Although contractors remain optimistic about the construction trajectory,” Calabro notes, “the prices in the sector have escalated throughout the state, with higher costs expected due to trade market uncertainties.”

For instance, the price of wood saw an increase of 8.2% from June 2024 to June 2025 in the Southeastern U.S., as reported by Florida TaxWatch.

Tariffs also play a significant role in boosting construction costs. Around 7% of materials used for residential construction were imported in 2024, as per the National Association of Home Builders. Notably, gypsum, essential for drywall, originates from Mexico, while 75% of imported lumber is sourced from Canada, according to Florida TaxWatch.

Currently, goods from Mexico face a 25% tariff, and there is a 35% tariff on lumber imported from Canada.

“As of August 2025, there is a 50% tariff on all steel, aluminum, and copper imports into the U.S. Economists indicate the construction industry remains volatile concerning demand and supply, which generally leads to price volatility,” states Jeff Kottkamp, Executive Vice President and General Counsel of Florida TaxWatch.

Kottkamp further comments, “The current tariff landscape is fluid, and staying informed about trade laws and tariffs pertaining to construction materials is crucial for effective planning.”

Due to the increased cost of materials, homebuilders are witnessing a rise in construction expenses of about $10,000 per home. As suggested by the report, potential solutions to alleviate this burden on consumers include sourcing alternative suppliers, stabilizing existing supply chains, and formulating national strategies for cost reductions.