Canada building construction cost growth continues in third quarter

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Canada construction cost growth Q3

Highlights

Residential building construction costs rose 0.8% and non-residential building costs increased 1.2% in Canada's third quarter, according to Statistics Canada.
Canadian retaliatory tariffs on U.S. goods, including up to 50% increases on steel and aluminum, intensified third-quarter construction material and equipment cost pressures.
Québec and Regina led quarter-over-quarter construction cost increases for both residential (2.3%, 1.8%) and non-residential (2.4% each), with metal and steel products driving gains.

Third-quarter cost increases and revisions

As reported by Statistics Canada, residential building construction costs increased 0.8% in the third quarter after a 0.6% gain in the previous quarter, while non-residential building construction costs rose 1.2% following a 1.4% increase.

The agency says the revision period for the Building Construction Price Index was extended by one quarter to incorporate data received after the usual revision window. As a result, the first-quarter Non-Residential Building Construction Price Index was revised up by 0.2%, while the previously published Residential Building Construction Price Index was unchanged.

On a year-over-year basis, construction costs for residential buildings in the composite of 15 census metropolitan areas rose 2.7% in the third quarter. Non-residential building construction costs increased 4.3%, including extraordinary revisions.

Builders report that third-quarter cost growth is driven by higher material, fuel, transportation and labour expenses. Contractors, mainly on the east coast and in the Prairie provinces, also point to capacity pressures and higher wages for skilled labour and subcontractors.

Regional and sector pressure points

Trade uncertainty continues to affect the construction industry after additional Canadian retaliatory tariffs on U.S. products take effect on September 8, 2026. Tariffs ranging from 15% to 50%, including 50% increases on some steel and aluminum products, add to cost pressure on construction materials and equipment in the third quarter.

Residential building construction costs rise across all measured CMAs in the quarter, led by Québec at 2.3% and Regina at 1.8%. Moncton at 0.6%, Toronto at 0.4% and Vancouver at 0.2% record the smallest quarterly increases.

At the residential division level, metal fabrications posts the largest quarterly increase at 2.4%, followed by structural steel framing and earthwork, both at 2.0%. Fire suppression and plumbing each rise 0.3%, while masonry is unchanged, as metal and steel products remain the main source of upward pressure because of retaliatory tariffs and ongoing supply chain disruption.

For non-residential buildings, Québec and Regina each post a 2.4% increase, followed by Montréal at 2.0%, while Ottawa and Halifax each show the smallest growth at 0.7%. Across measured divisions, structural steel framing rises 3.3%, conveying equipment climbs 3.1% and metal fabrications gains 2.1%, while communications, fire suppression and electrical record the smallest increases.

In our earlier article on Mycron Steel Bhd’s withdrawal of its legal challenge over anti-dumping duties, we explained that the company discontinued its judicial review after constructive discussions, not because of a court ruling. We also outlined how Malaysia’s removal of anti-dumping duties on certain imported steel coils shifted attention from litigation to the commercial impact on domestic steel pricing and competition.

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