Avdotia
Construction material costs rose twice as fast as contractor bid prices over the past year, and Avdotia Services is tracking who is actually absorbing that gap: not clients, but the contractors themselves.
The two numbers, side by side
According to the Associated General Contractors of America’s Florida East Coast chapter, the producer price index for inputs to new nonresidential construction climbed 7.1 percent from June 2025 to June 2026. Over the same period, contractors’ bid prices for new nonresidential buildings rose only 3.5 percent — roughly half the pace of their own material costs.
What is driving the material side
Steel is up 13 percent year-over-year and aluminum up 23 percent, driven mainly by Section 232 tariff expansion, with copper up 4.9 percent. These are the same metals tariffs that have shown up repeatedly in 2026’s construction cost data — the difference here is seeing them expressed as a direct gap against what contractors can actually charge for a finished project.
Why bid prices are not keeping pace
A 3.5 percent bid-price increase against a 7.1 percent input-cost increase means contractors are absorbing roughly half of this year’s material cost growth out of their own margins rather than passing it fully to clients. That is a competitive-pressure story as much as a cost story — in a market with enough contractor capacity bidding for the same projects, no single firm can unilaterally pass through the full increase without losing the bid to a competitor willing to eat more of the cost.
Florida’s residential number tells the same story from a different angle
Florida residential construction is running at $240 per square foot year-to-date in 2026, a 4.8 percent increase from 2025 — a smaller jump than the 7.1 percent input-cost figure, consistent with the same margin compression showing up on the commercial side. Material costs for steel, concrete, lumber, and key mechanical components are projected to stay elevated or climb further through the rest of 2026.
How Avdotia Services reads this
Avdotia Services LLC, at avdotia.work, treats a widening gap between input costs and bid prices as an early-warning signal for contractor financial health, not just a client-side savings story. A contractor absorbing half of a 7-percent-plus cost increase on thin margins for multiple consecutive quarters is more exposed to a bad project or a payment delay than one operating in a market where bid prices track input costs closely. That exposure eventually shows up as project delays or contractor failures if the gap does not close.
The takeaway
Clients are not fully feeling 2026’s material cost inflation in their bids — contractors are absorbing a meaningful share of it instead. That is good news for anyone pricing a project right now, and a genuine risk signal for anyone relying on a thin-margin contractor to still be solvent by the time that project finishes.