Construction Pricing Has Changed Dramatically 2016 to 2026 — Here’s Why

If you remodeled your kitchen in 2016, built a home addition in 2018, or received a construction estimate before the pandemic, today’s pricing can feel shocking.

Many homeowners in Albuquerque and throughout New Mexico are experiencing “sticker shock” when planning large remodel projects in 2026. Projects that once cost $75,000 may now cost $125,000 or more. Major additions and whole-home remodels that were once achievable under $200,000 can now approach double those numbers depending on scope and finishes.

At Extra Mile Builders, one of the most common conversations we have with homeowners is explaining how dramatically construction costs have changed over the last decade — and why.

The reality is that construction pricing did not increase because contractors suddenly became more expensive. Nearly every part of the industry changed between 2016 and 2026:

• Material costs increased

• Labor shortages intensified

• Building codes became stricter

• Energy requirements expanded

• Transportation costs surged

• Insurance premiums climbed

• Interest rates rose

• Supply chains became unstable

Understanding these trends helps homeowners budget realistically and make better long-term remodeling decisions.

Construction Cost Timeline: 2016–2026

Average Residential Construction Cost Trend

Year	Approximate Residential Construction Cost Increase
2016	Baseline
2018	+8% to +12%
2020	+15% to +20%
2021	+25% to +40%
2022	+35% to +55%
2024	+45% to +65%
2026	+55% to +80%+

Percentages vary by project type, materials, labor market, and region.

Construction Material Costs Increased More Than 40% Since 2020

One of the largest drivers of cost increases has been material inflation.

According to Associated Builders and Contractors data, overall construction input prices increased more than 40% between 2020 and 2025.

Some structural materials increased even more dramatically:

Material	Approximate Increase Since 2020
Structural steel	+40% to +56%
Concrete products	+41%
Gypsum/drywall products	+48%
Copper wire & cable	+22%+
Lumber (peak volatility)	2x in some periods

Visualizing Construction Cost Growth

Residential Construction Input Cost Growth

2016 | ██████████
2018 | ███████████
2020 | ██████████████
2021 | ████████████████████
2022 | ███████████████████████
2024 | █████████████████████████
2026 | ███████████████████████████

2016–2019: Stable Growth Before the Pandemic

Between 2016 and 2019, construction pricing increased gradually due to:

• Strong housing demand

• Skilled labor shortages

• Rising land prices

• Increasing code requirements

During this period, pricing was relatively predictable. Contractors could often lock pricing for longer periods, and supply chains were stable.

However, labor shortages were already beginning to impact the industry.

Fewer younger workers were entering trades such as:

• Plumbing

• Electrical

• HVAC

• Framing

• Masonry

• Finish carpentry

At the same time, Albuquerque and many Southwestern cities were experiencing growing housing demand.

2020–2022: The Pandemic Changed Everything

The construction industry changed dramatically during the COVID-19 pandemic.

Demand for remodeling exploded as homeowners:

• Worked from home

• Needed additional living space

• Built home offices

• Added casitas and ADUs

• Invested in outdoor living spaces

At the same time:

• Factories shut down

• Shipping delays increased

• Ports became congested

• Manufacturing slowed

• Material shortages developed

The result was unprecedented pricing volatility.

In 2021, construction input prices increased more than 23% year-over-year.

Lumber prices became one of the most visible examples. At one point, lumber and plywood prices more than doubled compared to pre-pandemic levels.

Steel prices also surged dramatically, increasing more than 87% during peak volatility periods.

Supply Chain Problems Created Delays and Cost Escalation

Homeowners often assume contractors control pricing, but contractors purchase materials from suppliers facing the same market conditions.

During the pandemic era:

• Appliances were delayed for months

• Windows had extended lead times

• Electrical equipment became difficult to source

• HVAC equipment shortages became common

Projects frequently experienced delays waiting for:

• Garage doors

• Transformers

• HVAC systems

• Cabinets

• Windows

• Electrical panels

When delays happen:

• Labor schedules shift

• Material storage costs increase

• Financing costs rise

• Projects take longer to complete

All of these factors increase overall project pricing.

Labor Costs Increased Across Every Trade

Labor shortages have become one of the biggest long-term challenges in construction.

Skilled tradespeople are in extremely high demand nationwide, including Albuquerque.

Over the last decade:

• Wage rates increased substantially

• Competition for skilled crews intensified

• Subcontractor availability tightened

Contractors today face higher costs for:

• Payroll

• Workers compensation

• Healthcare

• Vehicle expenses

• Fuel

• Tools and equipment

These increases affect every phase of residential remodeling.

Energy Codes and Building Requirements Became More Expensive

Modern homes and remodels must now meet much stricter building codes than they did 10 years ago.

Today’s projects often require:

• Higher insulation values

• Better air sealing

• Energy-efficient windows

• Advanced HVAC systems

• Mechanical ventilation

• Make-up air systems

• Updated electrical systems

While these improvements increase comfort and efficiency, they also increase construction costs.

For example:

• Modern HVAC systems are significantly more expensive than older units

• Energy-efficient windows cost more upfront

• Additional insulation and air sealing add labor and material costs

Many older homes also require electrical upgrades to meet current code standards during major remodels.

Transportation and Fuel Costs Increased

Construction materials are expensive to transport.

Everything from:

• Lumber

• Concrete

• Drywall

• Steel

• Roofing

• Cabinets

• Appliances

…must be shipped, hauled, stored, and delivered.

Diesel fuel increases heavily affect construction pricing because transportation is built into nearly every material cost.

Recent supplier notices in 2026 show:

• Fuel surcharges added to deliveries

• Window and siding increases of 5–12%

• Roofing increases of 5–10%

• Gutter material increases of 10–15%

Interest Rates and Financing Costs Increased

The cost of borrowing money changed dramatically after 2022.

Higher interest rates affected:

• Construction loans

• Equipment financing

• Material inventory

• Contractor operating costs

• Homeowner financing

Even contractors carrying payroll and materials between payment cycles face higher financing costs today than they did several years ago.

Longer project timelines also increase carrying costs for everyone involved.

Insurance Costs Increased Dramatically

Insurance premiums have risen substantially throughout the construction industry.

Contractors today pay significantly more for:

• General liability insurance

• Workers compensation

• Commercial auto insurance

• Builder’s risk coverage

These costs increased because:

• Vehicle repair costs rose

• Material replacement costs increased

• Litigation costs increased

• Labor costs increased

Insurance affects every contractor, supplier, and subcontractor on a project.

Tariffs and Global Trade Continue Affecting Pricing

Tariffs and international trade issues continue influencing construction pricing in 2025 and 2026.

Recent tariff increases on:

• Steel

• Aluminum

• Copper

• Imported materials

…have created renewed pricing pressure across the construction industry.

Industry economists warned that:

• Steel prices increased over 13% year-over-year

• Aluminum prices increased more than 22%

• Copper pricing continues climbing sharply

Why Remodel Projects Cost More Than Homeowners Expect

Many homeowners compare today’s remodel estimates to:

• A friend’s project from 2017

• Their own remodel from 2018

• HGTV pricing

• Internet averages

The problem is:

Those numbers are no longer realistic in today’s market.

A whole-home remodel in 2026 involves:

• Modern code compliance

• Higher labor rates

• More expensive materials

• Longer lead times

• Increased insurance costs

• Higher financing costs

• Greater project complexity

Even “simple” remodels now involve substantial infrastructure costs behind the walls.

The Importance of Realistic Budgeting

The goal of budgeting is not simply finding the cheapest estimate.

A realistic remodeling budget should account for:

• Construction inflation

• Material allowances

• Permit costs

• Utility upgrades

• Design fees

• Contingencies

• Long-term durability

Low estimates often exclude critical items that eventually appear later as change orders or unexpected costs.

What Homeowners Should Focus On Instead of Just Price

Instead of comparing only bottom-line pricing, homeowners should evaluate:

• Contractor experience

• Communication

• Detailed scopes of work

• Realistic allowances

• Scheduling transparency

• Licensing and insurance

• Quality of workmanship

The cheapest proposal is rarely the best long-term value.

A properly planned remodel built to current standards can provide:

• Better energy efficiency

• Lower maintenance

• Increased property value

• Improved functionality

• Greater long-term durability

Looking Ahead: What Happens Next?

Construction pricing may stabilize periodically, but most industry experts do not expect costs to return to 2016 or pre-pandemic levels.

In fact, current data shows construction material pricing continues increasing again in 2025 and 2026 due to:

• Tariffs

• Fuel costs

• Labor shortages

• Global demand

• Energy pricing

• Supply chain instability

Construction material prices in early 2026 were reported at approximately 45% higher than February 2020 levels.

For homeowners considering large remodel projects, waiting indefinitely for prices to “go back down” may not be realistic.

At Extra Mile Builders, we believe the best approach is honest planning, realistic budgeting, and helping homeowners understand where construction dollars are actually going in today’s market.

---

Written by Extra Mile Builders, a licensed GB-98 general contractor and veteran-owned remodeling company serving Albuquerque, New Mexico, Rio Rancho, New Mexico, Santa Fe, New Mexico, and surrounding New Mexico communities.

Extra Mile Builders specializes in kitchen remodeling, bathroom renovations, ADA accessibility upgrades, aging-in-place remodeling, casitas, home additions, custom homes, and full residential construction services throughout New Mexico.