Inflation is on the rise again for some industries, and recent figures indicate that tariffs are contributing to this trend. One of the industries affected is the construction sector in Florida.
Construction plays a vital role in Florida’s economy, accounting for 5.7 percent ($97 billion) of the state’s gross domestic product (GDP) in 2024. Florida TaxWatch has released an Economic Commentary titled “Trends in the Cost of Construction Materials,” which examines the increasing prices of construction materials both nationally and within Florida. This report aims to inform taxpayers about current and potential future costs.
The construction industry encompasses a wide range of activities, from minor home repairs to housing construction and complex commercial developments. Several factors shape this industry, including material costs, labor expenses, supply chain stability, and overall market trends. Increases in the price of individual inputs can significantly affect the total production costs for contractors and “do-it-yourself” enthusiasts alike.
The five primary materials used in commercial construction are concrete, steel, wood or lumber, stone, and brick/masonry. When the prices of these materials rise, it can quickly lead to higher costs for consumers.
In July of this year, Florida Daily reported on the potential impacts of new tariffs on Florida’s economy, noting that 75 percent of the imported lumber used for construction comes from Canada, while a crucial component of drywall—gypsum—originates from Mexico.
A survey by the Associated General Contractors of America (AGC) found that 46 percent of Florida contractors identified material costs as their top concern. Higher construction material costs in Florida can increase the price of a house by approximately $10,000.
The Florida Department of Transportation anticipates a rise in construction costs of five to nine percent. Another study estimates that Florida real estate costs will increase by three to five percent in 2025. Additionally, rising material costs are already causing a four percent budget overrun in affordable housing projects, which is affecting the Live Local Act.
