Material Costs Surge 8.2%; AI Tools Offer Relief for GCs
Another day, another jump in material prices. A new report this week confirms what every general contractor feels in their gut: costs are still climbing, with wood alone up over 8% in the last year. But it’s not all bad news. While you’re navigating volatile tariffs and a tight labor market, new AI-powered tools are emerging that promise to claw back valuable minutes from every workday, turning lost time into potential profit. Let’s dig in.
1. Material Costs Spike Again, Driven by New Tariffs
A new report from Florida TaxWatch highlights a painful reality for contractors, with key material prices continuing their upward trend. From June 2024 to June 2025, wood prices surged 8.2%, while steel rose 5.1% and concrete increased by 4.7%. These increases are largely attributed to new tariffs, including a 50% tariff on steel, aluminum, and copper imports, adding an estimated $10,000 to the cost of building a single home.
Why it matters for contractors: These numbers confirm that bidding on projects requires constant vigilance on material costs. Contractors running small businesses need to build price escalation clauses into their contracts and stay in constant communication with suppliers to avoid seeing their margins disappear overnight.
Source: Report: Construction industry faces price increases
2. Economic Recovery & Labor Paradox: More Work, Fewer Workers
While the construction lending freeze appears to be thawing, a new analysis from NewEdge Wealth’s Chief Investment Officer, Cameron Dawson, points to a persistent labor paradox. Even as regional banks stabilize and project financing becomes more accessible, a tight labor market, exacerbated by shifting immigration policies, continues to drive up wages. Construction employment is near an all-time high, giving skilled workers significant leverage.
Why it matters for contractors: The good news is that more projects may get the green light. The bad news is that finding and affording the skilled labor to build them will remain a primary challenge. This puts a premium on retaining your best team members and investing in training to upskill your existing workforce.
Source: Economic Shifts Contractors Must Watch in 2025
3. New AI Tool Promises to Save Hours on the Jobsite
A Los Angeles-based startup, PlanChecker.AI, has launched a new platform that allows construction teams to “chat” with their building plans. Instead of manually searching through PDF sets, contractors can ask natural-language questions like, “Where is the fire riser detail?” and get an answer in seconds. The company claims this can save 20-40 minutes per field question and has helped early adopters avoid over $100,000 in monthly rework costs.
Why it matters for contractors: For a small crew, saving even an hour a day on administrative tasks is a massive win. This type of practical AI moves beyond hype and offers a tangible return on investment by reducing delays, preventing errors, and freeing up your team to focus on the actual build.
Source: PlanChecker.AI Expands Platform with AI Chat
4. Chicago’s Apartment Construction Plummets by 60%
Chicago is facing the steepest decline in new apartment construction of any major U.S. city this year. Openings are projected to fall by a staggering 60.4%, down to just 3,756 units. This slowdown reflects a broader trend of political and economic uncertainty that is causing developers to pause or cancel large-scale residential projects.
Why it matters for contractors: For contractors in the Chicago area and the broader Midwest, this signals a significant market shift. Those focused on large multifamily projects may need to pivot to renovation, maintenance, or smaller commercial work to keep their pipelines full. It’s a reminder that regional market conditions can change rapidly.
Source: Chicago Construction Industry News
5. SBA Rule Change Could Open Up Federal Contracts for More GCs
The Small Business Administration (SBA) has proposed changes to its size standards, which could allow more general contractors to qualify as “small businesses” and compete for federal contracts. The proposal aims to increase the number of firms eligible for government work, particularly in industries where small businesses are currently underrepresented.
Why it matters for contractors: Federal contracts can provide a stable revenue stream, but the complex bidding process and strict size requirements have historically been a barrier for many. This change could open a valuable new market for contractors running small businesses who are looking to diversify their client base beyond the private sector.
Source: SBA Proposes Bigger Size Standards
Conclusion: The construction landscape in late 2025 is a mixed bag of rising costs, persistent labor shortages, and emerging opportunities. While external pressures continue to squeeze margins, the stabilization of lending and the introduction of practical, time-saving technologies offer a path forward. The contractors who will thrive are those who stay informed, adapt to regional market shifts, and strategically embrace tools that boost efficiency on and off the jobsite.
