In its round-up of construction costs for the second quarter of 2025, Statistics Canada finds that the ongoing tariff dispute between Canada and the United States has increased volatility in both pricing and availability of certain materials.

Statistics Canada notes that residential building construction costs increased 1.0% in the second quarter, following a 0.9% increase in the previous quarter. Non-residential building construction costs rose 1.6% in the second quarter, following a 1.0% increase in the previous quarter.

Year over year, construction costs for residential buildings in the 15-census metropolitan area (CMA) composite rose 3.7% in the second quarter, while non-residential building construction costs were up 4.0%.

Builders surveyed for the report indicated that uncertainty surrounding tariffs and tariff countermeasures continued to create challenges in securing contracts and has contributed to delays in project starts. At the same time, persistent skilled labour shortages continued to push labour rates higher in several regions across the country. As building activity remained modest in many regions of the country in the second quarter and project starts were delayed, competition for available work intensified in some areas, putting pressure on margins.

Price increases at the component level were partly influenced by rising construction material costs, including some affected by tariffs and associated countermeasures. However, subdued construction activity in major regions like Toronto and Vancouver offset upward pressure at the aggregate level.

Plumbing division leads residential construction cost growth

In the second quarter, residential building construction costs rose across all 15 CMAs measured, although increases varied widely by region. Québec (+3.4%) experienced the largest quarterly increase, driven by higher wage rates. Regina (+2.8%) experienced the second strongest increases in costs, followed by London (+2.5%) and Montréal (+2.4%). Calgary (+0.4%) and Toronto (+0.2%) experienced the lowest quarterly growth in residential construction costs.

At the 15-CMA composite level for residential buildings, the plumbing (+3.7%), HVAC (+3.0%), utilities (+2.9%) and structural steel framing (+2.7%) divisions recorded the largest quarterly increases in the second quarter. Several components within each of these divisions experienced large price increases, many of which were impacted by the 25% countermeasure tariffs implemented by Canada in mid-March. The wood, plastic and composites (-0.2%) and conveying equipment (-0.7%) divisions experienced quarterly price declines.

Québec leads non-residential construction cost growth

Costs to construct non-residential buildings increased the most in Québec (+3.4%), followed by Montréal (+2.6%), and London (+2.5%) in the second quarter. The increases reported across the province of Quebec were primarily driven by rising labour costs, while all regions measured experienced price increases concentrated primarily in divisions that rely heavily on metal-based materials such as plumbing, metal fabrications, and structural steel. Victoria (+0.9%) and Halifax (+0.7%) recorded the smallest increases.

At the composite level, non-residential building construction costs increased across all divisions measured in the second quarter, with the structural steel framing (+3.4%) and plumbing (+2.5%) divisions recording the largest increases. Some of the largest price increases in these components were seen across the Prairies and Quebec.