Despite Market Pressures, Non-Residential Construction Outlook for Seattle Holds Steady with Modest Cost Increases
Nonresidential construction conditions remained steady through the third quarter, with market sentiment generally stable despite broader economic crosscurrents. Contractors continue to report consistent bidding activity, while owners are showing greater confidence in advancing projects that were previously delayed or under review. Supply chains continue to stabilize, and pricing volatility has eased across most major trades, helping keep overall cost escalation contained.
Broader market indicators reflect a cautious but tentatively more hopeful environment. The Dodge Momentum Index advanced sharply during the quarter, reflecting renewed planning activity across commercial and institutional sectors. Total construction starts also improved modestly in September, suggesting that underlying demand remains intact even as developers proceed cautiously amid policy and financing uncertainties.
The Seattle Mortenson regional office reported only a nominal cost increase of +0.88% this quarter. Across other Mortenson regional offices, Portland and Chicago recorded the smallest quarterly changes, both marginal at +0.78%, while Salt Lake City saw the highest, though still modest, increase at +1.65%. The remaining offices reported slight changes within that range: Milwaukee (+1.33%), Denver (+1.34% ), Minneapolis (+1.38%), and Phoenix (+1.42%).
Nationally, nonresidential construction costs tracked by the Mortenson Quarterly Cost Index for the third quarter of 2025 rose by +1.16% over the past quarter and +6.60% over the previous twelve months.
Material and labor costs in Seattle increased modestly this quarter despite volatility in some scopes pressured by tariffs. Material costs edged slightly higher, while labor remained steady amid stable workforce availability and minimal wage movement.
Trucking and ocean freight markets are both expected to see relatively stable or declining prices in 2026 due to weak demand and ample capacity. In trucking, rates will likely remain low as warehouse prices fall amid strong inventory levels, though factors like driver shortages and rising container fees could create upward pressure.
Similarly, ocean freight rates are projected to decrease into early 2026 because of eased tariff front-loading, increased shipping capacity, and reduced congestion through the Panama Canal. While tariffs may briefly elevate prices in late 2025, freight costs are anticipated to stay low overall, with occasional temporary spikes caused by tariff pass-throughs and trade route changes.
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CONSTRUCTION COST INDEX
Nationally, the Mortenson Cost Index went up 1.2% in the third quarter of 2025 and is up 6.6% compared to a year ago.
In Seattle, costs rose 0.9% this quarter and 6.6% over the last twelve months.
CONSTRUCTION EMPLOYMENT
Building construction employment in the Seattle metro averaged 20,500 workers per month in the first nine months of 2025—a 7% decline compared to the same period in 2024. Labor availability remains stable, though the federal shutdown left September data unavailable, limiting late-Q3 visibility.
Source: Bureau of Labor Statistics
Seattle-Bellevue-Everett, WA – Construction of Buildings
MATERIAL PRICING CHANGES
Construction material costs remain elevated amid a gradually stabilizing but volatile global supply chain, affected by economic uncertainty, tariffs, and fluctuating demand. Steel and copper continue to experience notable, upward price swings.
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Cost movement in the Seattle market was concentrated in a few steel-related scopes, partially offset by select material declines. Reinforcing steel material and installation, along with steel framing and stair erection, saw increases this quarter, while cast-in-place concrete and metal stair fabrication experienced slight declines, keeping overall movement modest. Most other systems, including electrical, plumbing, and HVAC, remained largely unchanged. Competitive market dynamics continued to moderate escalation across the Seattle region.
Trade partner participation remains strong, with disciplined subcontractor pricing balancing cost fluctuations in steel and finish packages. Bid activity through Q3 remained consistent, supported by steady institutional and technology-sector demand. Overall, Seattle’s construction environment remains stable, with only minimal upward cost movement.
The Dodge Momentum Index, a leading indicator of national nonresidential construction planning, continued its upward trajectory through the third quarter. The index surged 20.8% in July, followed by additional gains of 8% in August and 3% in September, signaling renewed confidence in both commercial and institutional sectors. Total construction starts also improved, rising 3.1% in September with nonresidential building up 11.9% for the month.
“After months of wait-and-see due to tariff uncertainty, owners and developers have begun to move forward with projects and assumed higher costs for them,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “While the recent uptick points to strengthening planning activity, Dodge notes that overall momentum remains tempered by broader economic headwinds.”
Despite cost stability, the design pipeline remains under pressure. The AIA/Deltek Architecture Billings Index fell to 43.3 in September, indicating billings at architecture firms continue to decline. As a forward-looking indicator for nonresidential construction activity, this softness suggests future project starts may continue at a measured pace, even as cost pressures stay contained.
The Mortenson Construction Cost Index for Seattle reflects slightly elevated costs for the third quarter of 2025. Looking ahead, overall construction conditions are expected to remain steady through the remainder of 2025. Input cost volatility has eased, and lead times are improving, though certain commodities and global supply chains still face elevated uncertainty. Labor availability continues to vary by region and trade, though wage growth has moderated from earlier peaks. Competitive bidding persists in several markets, helping to keep escalation in check. While select sectors such as manufacturing and data centers continue to drive demand, most markets are tracking at a consistent pace. Barring major policy or supply disruptions, the outlook for nonresidential construction remains broadly stable.
For a more specific update or questions regarding this report, please contact:
Jared Chapman
Chief Estimator
jared.chapman@mortenson.com
425.497.6648
Nate Jenkins
Director of Business Development
nathan.jenkins@mortenson.com
425.497.6610
Mortenson tracks and reports on eight metropolitan areas in the U.S. including Chicago, Denver, Milwaukee, Minneapolis, Phoenix, Portland, Salt Lake City and Seattle. The Mortenson Construction Cost Index is calculated quarterly by pricing representative non-residential construction projects in various metropolitan areas. It is part of a portfolio of industry insights and market studies provided by Mortenson.