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July 2026 News
What Next?
The big question for the USA construction sector is the Iran conflict. How long will it last and will it accelerate inflation?
Iran is inflicting serious damage to all of its neighbors. Bahrain, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, and UAE have all been attacked by drones and missiles from Iran in the last 3 months.
More than 600 vessels were trapped or delayed in the Straits of Hormuz by the end of June. Twelve to forty ships a day exit the Straits versus 100-150 daily before the conflict. It may take six months to return to normality, assuming both parties live up to the MOU agreement which looks ever more fragile.
Insurance and Ocean freight costs continue to increase as much as 15% per year. There are many risks around the world, and these increases are a measure of those risks.
Worldwide Construction Expansion
Global construction data firm Compass Internation Inc. just published their 3rd Quarter report. They saw noteworthy worldwide construction expansion moving into the 2nd half of 2026. Hundreds of AI Data Centers, dozens of LNG facilities, major overland pipelines and key high voltage electric power transmission lines are being built or planned in the USA.
However, more than 30 AI data center construction projects in the USA valued at $20 billion are in dispute or on hold. Apprehension from local communities regarding water usage and higher household electric bills are the main issues causing the delays.
Tariffs on timber, steel, and aluminum remain in place, and they impact construction costs going into the 2nd half of 2026.
Projected Construction Material Increases in Q3 2026
Projected construction material increases in the 3rd Q of 2026 from 28th February (start of the Iran conflict).
Material and % Increase (Q3 2026)
Cable / Copper products - 18% to 23%
Aluminum products -16% to 20%
Steel / rebar -14% to 17%
Electrical components /
Instrumentation devices - 11% to 16%
HVAC components - 9% to 15%
Process / Utility Pipe CS / SS - 8% to 14%
Sand & aggregate - 6% to 12%
Windows / Door /
Curtain wall systems - 4% to 10%
Lumber / Plywood - 3% to 7%
Paint products - 3% to 6%
Roofing Products - 2% to 5%
PVC Piping - 2% to 4%
Bricks / Concrete Blocks - 2% to 4%
Drywall / Gypsum Products - 2% to 4%
Siding - 2% to 4%
Cement Production - 2% to 3%
Pre-Cast Concrete Products - 2% to 3%
Ready Mixed Concrete - 1% to 3%
USA Leads the Way
The USA continues to be the #1 economy, with the largest construction sector in the world.
A near $31 trillion economy powers unsurpassed technology knowhow, creativity, and worldwide influence. In 2026, the value of this market sector is between $2.3 & $2.7 trillion, making it by far the largest construction market in the world.
Quoting Compass, their US construction industry prediction for 2026 indicates "restrained growth, perhaps 2.3% to 2.7% increase from the previous year. AI Data centers, Semiconductor / microchip facilities, Pharma & Hi-Tech & Manufacturing, Power / Pipeline projects and Infrastructure projects, will be the projects being undertaken in the 2nd half of 2026. Housing, commercial office, shopping malls, etc., will see a slight decline in 2026. US tariffs on imported materials into the US is a real issue. These tariffs on steel, copper, aluminum and other construction materials and components are averaging out to be in the 12.5% to 17.5% range. This tariff issue is still not fully implemented and is subject to negotiation and change, it seems, on a weekly basis.”
Risk Analysis Factors
The main risks the Global Construction industry faces are:
1. The Iran conflict could endure many months or even years, triggering global recession.
2. Prolonged continuation of the Russia vs. Ukraine war.
3. China’s trade and territorial aspirations and a possible invasion of Taiwan.
4. High construction material costs and tariffs. Material costs have increased by close to 30% in the last 3 years, with more increases potentially on the way.
5. Acute shortages of skilled labor continue to be a problem.
6. Persistent inflation and high interest rates continue to be a problem in some countries.
7. The future of tariffs on imported equipment and materials.
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