Planning for construction projects in 2026 can test the mettle of even the most seasoned analysts, procurement experts, and supply chain specialists thanks to the cost volatility of materials that’s roiling international markets.

Spurred by a combination of several international conflicts currently impacting trade routes, and a United States tariff strategy that’s hammering imported goods in many industries, the cost volatility for wood and other construction materials is negatively affecting project budgets and schedules for firms all over the U.S.

In this edition of The NFI Northstar, we’ll take a look at some potential cost mitigation strategies firms can adopt to offset the volatility that’s affecting material prices.

Hold the Line
Doing nothing in the face of adversity is very much a strategy, but it’s definitely NOT going to save you any time or money on your projects. Some firms will just throw up their hands, embrace the suck of high tariffs for now, and pass those costs on to clients and customers like it’s business as usual.

Rethink Your Procurement Strategies
If you’ve been single sourcing your materials from international partners, consider exercising your options to see if finding additional wholesalers, manufacturers, or distributors closer to home to cut down on transportation costs and spread your risk around.

Consider Operational Updates
Trying to optimize your field operations is another potential strategy for mitigating your project costs: Streamline crew numbers when possible; make the switch to prefab materials versus field installs; be open to using new, alternative or unconventional materials where applicable; make active attempts to minimize waste on the job site; and recycle materials where you can. Even the best-running vehicles require regular tune-ups to keep things humming.

Get it in Writing
Make time to review your contracts, and consider adding safeguards such as escalation clauses and shorter bidding periods to help mitigate unexpected cost increases.

Procrastinate a Little
If project costs are spiraling out of control, consider talking to your partners about delaying or rescheduling projects to a later date. You may be able to lock in materials for less by waiting for the international tumult to die down and tariff strategies return to normal.

Reading Resources
Google’s A.I. Overview “Wood and construction material costs face significant volatility. Driven by restrictive trade policies (such as lumber and metal tariffs), tight labor supply, and lingering supply chain disruptions, builders are experiencing unpredictable price swings. This volatility forces firms to regularly adjust budgets, as sudden spikes threaten to cancel or postpone planned construction.”

Commodity Price Volatility Hits Homebuilders as Tariffs Reshape Costs “Commodity price volatility – driven by slow demand and tariff fallout – has sharply increased the cost of building materials. The single most significant factor driving Q4 2025 commodity prices was aggressive tariff implementation:

• Steel: 50% tariffs (implemented June 2025)
• Aluminum: 50% tariffs (implemented June 2025)
• Copper: 50% tariffs on products/components (August 2025)
• Lumber: 35.2% total on Canadian imports (potentially rising to 45%)
• Cement/Concrete: 25% on Canadian/Mexican imports

An AGC-NCCER survey found that 43% of general contractors reported at least one project canceled, postponed or scaled back in the past six months due to higher material costs driven by these tariffs.”

Material Costs Affect Housing Affordability “It’s important to note that while these strategies can help manage the impact of rising material costs, they won’t completely eliminate the challenges. The construction industry will likely need to adapt to this new reality of higher material prices for the foreseeable future. This could involve things like rethinking project designs to be more cost-effective, finding new sources of funding to cover increased costs, and unfortunately, the inevitable passing of some of the increased costs onto customers through higher prices.”

What the Data Says: Lumber Price Updates “After dipping for two straight quarters, lumber costs spike 5.11% in Q2 of 2026. Year-over-year prices are up 4.21%, the ninth straight quarter of year-over-year growth. Another increase may be on the horizon, but it is likely to stay in the single digits.”

That’s it for this edition of The NFI Northstar. Thanks for reading! We’ll be back next month with more helpful industry news.

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