The price of steel, aluminum, and copper continued to climb at the close of 2025 and start of 2026. Other construction material prices were stable. Industry surveys show increased optimism among construction executives after a third interest rate cut at the end of 2025.
Inflation & Interest Rates
Inflation eased at the end of 2025. The 12-month change in the consumer price index (CPI), a common measure of inflation, declined from 2.9% in August to 2.7% in December. The 12-month change in the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, similarly floated between 2.7% (in August and October) and 2.8% (in September and December). The 12 month change in the CPI for the Atlanta area decreased from 1.7% in August to only 0.9% in December.
The Federal Reserve reduced interest rates 0.25% for the third time in a year at its December 2025 meeting. After noting its dual mandate to maximize employment and limit inflation to 2% over the longer run, the Fed reasoned that while inflation “remains somewhat elevated,” the “downside risks to employment rose in recent months” creating a “shift in the balance of risks” that justified another rate cut. A majority of Federal Open Market Committee meeting participants reported in December that they expect one 0.25% interest rate cut in 2026, while 42% of those participants expect two. The price of 30-Day Fed Funds futures implies that market participants do not expect another interest rate cut until at least June 2026. As of January 15, 2026, the average interest rate for a 30-year fixed rate mortgage was 6.06%, the lowest it has been since September 2022.
SOURCES: U.S. Bureau of Labor Statistics; U.S. Bureau of Economic Analysis; Board of Governors of the Federal Reserve System; CME Group, CME FedWatch Tool; Freddie Mac; Federal Reserve Economic Data (FRED), Federal Reserve Bank of St. Louis
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