Material Costs Just Rose More in Four Months Than in the Last Three Years. Here’s What Contractors Should Do Now

The estimate you wrote two months ago is already wrong.

Building material prices, excluding energy, rose 3.7% year over year in April 2026, the fastest pace in three years. Then May was worse. Residential construction input costs jumped 2.1% in a single month, the largest monthly gain since March 2022. Year over year, the cost of goods going into new homes is up 8.3%. Building materials alone are up 4.4%, the fastest annual pace since January 2023.

Two years of gradual increases gave contractors time to adjust. The last four months didn’t. And the window between writing an estimate and losing money on it is shrinking fast.

Andriy Bezruchuk, founder of Bezruchuk Inc., is a general contractor with over 12 years of experience operating in Washington and Ohio, specializing in high-end residential remodeling. His response to the cost spike has been to rebuild his estimating process around a single assumption: prices will move before the project starts.

What’s driving the acceleration

Tariffs are part of the story, but they’re not news anymore. Steel, aluminum, and copper have carried 50% duties for months. Kitchen cabinets and vanities from China sit at 25%, with a planned increase to 50% delayed until January 2027. What changed in the first half of 2026 is what’s stacking on top of those tariffs: an energy price surge driven by the conflict in the Middle East.

Energy inputs to residential construction surged 17.2% in May alone and are up 62.8% year over year. Diesel fuel, which moves every material delivery truck in the country, is up 105.9% from a year ago. Those costs flow directly into what contractors pay at the supplier counter and what it costs to get materials to the job site.

“It’s not only the materials that went up, it’s the delivery,” Bezruchuk says. “When we order large loads for additions or large supplies, we have to factor that in now.”

Those costs add up, and they either land on the consumer, or on you. Building material costs are already up more than 40% since December 2020. NAHB estimates tariff actions alone add roughly $10,900 to the cost of a typical home. And current tariffs could add approximately $30 billion to residential construction and renovation costs by 2027. Now energy costs are accelerating on top of that baseline.

At the line-item level, the exposure depends on what you’re buying. Cabinet costs range widely depending on the project. A standard set might run $7,000 to $12,000, but on the high-end remodels Bezruchuk handles, a single kitchen can require $40,000 to $50,000 in cabinetry alone. “When a line item is that size, you have to watch it closely,” Bezruchuk says. “Prices might only shift three percent, but on a $50,000 order, that’s real money off your profit if you haven’t accounted for it.”

Your estimates are expiring faster than you think

Most contractors know costs are rising. Fewer have changed how they bid. Although roughly 70% of contractors report being affected by tariffs, only 20% have responded by adding price-sharing adjustments or escalation terms to their contracts. Meanwhile, 53% of contractors list materials costs as a top concern for 2026.

Bezruchuk responded by cutting his estimate validity from 30–60 days down to two weeks. “Usually we’d give a month, sometimes even two,” he says. “Right now it’s strict: two weeks. After that, we have to review the estimate and provide an updated one if the customer hasn’t decided.”

The shorter window creates more work. Every estimate now requires live verification with suppliers. “We refresh our pricing every two weeks to make sure the numbers are current,” Bezruchuk says. “Every time we write an estimate, we actually need to call the manufacturer or the tile supplier to double-check.” It’s a heavier process, but it’s the difference between quoting a job you can profit on and quoting one that costs you money before you start.

Your move: If your estimates are valid for 30 days or more, you’re absorbing every cost increase that lands in that window. Shorten to two weeks, and add an expiration date to every quote. Build a biweekly cadence for verifying pricing with your top suppliers.

List major materials as allowances, not fixed costs

Bezruchuk’s structural change goes beyond timing. He’s also rethinking how materials show up in the estimate. Instead of quoting a fixed price for high-cost items like cabinetry, countertops, or fixtures, he lists them as allowance items. The material type and estimated cost are documented, but the final price adjusts to what the supplier actually charges at the time of purchase.

“We can’t really lock material pricing anymore,” Bezruchuk says. “But what we do instead is assure the client that labor costs won’t change. On most projects, materials are 20% to 30% of the total, so we’re locking the bigger piece and being transparent about the part that’s moving.”

His approach does two things:

• For the contractor, it prevents absorbing price increases that occur between signing and ordering. 
• For the homeowner, it creates flexibility. If the original selection spikes in cost, they can substitute a different product or brand at the same spec level without renegotiating the entire contract. 

“The customer understands that the price might go up, but they also have the option to go with a different product or a different brand,” Bezruchuk says. “If we can substitute one with another, we go that way.”

Put it in writing. Allowance language needs to be explicit in the contract: which items are allowances, that they’re subject to change, and what the process is if costs shift. Bezruchuk sees it as mutual protection. “By doing this, we’re protecting ourselves and we’re protecting the customer,” he says.

Your move: Review your estimate template. Consider structuring line items that are subject to material price volatility as an allowance, not a fixed cost. Document the allowance clearly in your contract, and make sure the homeowner understands the substitution option.

Purchase materials the day the deposit clears

In a market where NAHB reports building material prices have posted annualized inflation above 3% every month since July 2025, every day between deposit and purchase order creates exposure. A two-week delay on a $50,000 material order in a market moving this fast can cost hundreds or thousands.

Bezruchuk doesn’t wait. “As soon as we get the material deposit, we’re placing orders right away,” he says. “Because later it might be either delayed or way more expensive.”

Price increases are only part of the exposure. Supply disruptions happen, and tariff-driven demand shifts mean popular items can go on backorder without warning. Order right away to lock in both the price and the availability.

When costs spike, financing keeps projects moving

Bezruchuk’s clients typically pay cash, with about 90% of his projects funded out of available savings. But most residential contractors don’t operate in that segment. In 2025, 54% of homeowners financed renovations through home equity loans or lines of credit, 29% used savings, and 10% used credit cards.

With HELOC rates averaging 7.47% and home equity loans above 8% as of mid-June, the traditional financing path is expensive. For homeowners who locked in low mortgage rates during the pandemic, tapping home equity at today’s rates feels like a step backward.

Here’s where projects stall. The homeowner wants the renovation. The contractor has the estimate ready. But the number is higher than it was three months ago, and the homeowner doesn’t see a financing path that feels manageable. Offering financing through Acorn Finance at the point of estimate changes the conversation from “can I afford $48,000 right now?” to “can I afford $400 a month?” That reframe is often the difference between a signed contract and a deferred project.

Your move: If rising material costs are pushing your project totals higher than the original conversation, add a financing option to your estimates. Acorn Finance lets homeowners compare multiple loan offers in minutes without affecting their credit score. You get paid in full today. They get a monthly payment they can commit to.

Start here

Every change Bezruchuk described can be implemented without new software, new staff, or a bigger operation. It comes down to tighter cycles and better documentation. 

This week: Shorten estimate expiration to two weeks. Call your top three suppliers and verify current pricing on your highest-cost materials. Add allowance language to your estimate template for line items impacted by material price volatility.

This month: Build or update an internal price list for your top 10 materials and set a biweekly calendar block to refresh it. Make sure your contract template includes an escalation clause.

This quarter: Set up contractor financing through Acorn Finance so homeowners can say yes to full-scope projects, even as material costs rise.

The bottom line

Material costs have accelerated faster in the last four months than in the previous three years, and the forces driving them aren’t reversing. Protecting your margins comes down to faster cycles, better contract language, and a willingness to stop absorbing costs the market is generating. Estimate in two-week windows. List major materials as allowances. Purchase the day the deposit clears. And give homeowners financing options that keep full-scope projects on the table. 

Material costs climbed again this month. Are your bids keeping up? Acorn Finance lets your customers compare real loan offers in minutes, so a $40,000 project becomes a monthly payment they can say yes to, even when costs are higher than last quarter. See how contractor financing works.