Building construction costs increased 0.8% in the first quarter of 2025, following a similar increase in the previous quarter.

Builders noted that, in the first quarter, the industry continued to face cost pressure from skilled labour shortages and building code changes in several CMAs at the beginning of the year.

Tariff-related uncertainty was noted across the country, as well as possible delays to construction plans, as both consumers and businesses were holding off on major purchases amid the unclear outlook.

Year over year, construction costs for residential buildings in the 15-census metropolitan area (CMA) composite rose 3.4% in the first quarter. Non-residential construction costs rose 3.5% year over year.

Utilities division leads residential construction cost growth

In the first quarter, residential building construction costs rose across all but one CMA. London (+2.5%) saw the largest quarterly increase, followed by Québec (+2.2%), while Toronto (0.0%) experienced no change in residential construction costs.

At the division-level for residential building construction, the utilities (+1.8%) and metal fabrications (+1.5%) divisions recorded the largest quarterly increases in the first quarter. The equipment (-0.4%), exterior improvements (-0.3%) and earthwork (-0.1%) divisions experienced quarterly price declines.

London leads non-residential construction cost growth

Non-residential building construction costs rose across all 15 CMAs measured in the first quarter, with London (+1.9%) experiencing the largest increase, followed by Moncton, Québec and Calgary (+1.0% each). Halifax and St. John's (+0.1% each) recorded the smallest increases.

In the first quarter, non-residential building construction costs increased across all divisions measured, except for the electrical division (-0.2%). The conveying equipment (+2.2%) and metal fabrications (+1.6%) divisions recorded the largest increases.

The price increases in London for both residential and non-residential construction in the first quarter were driven by costs within structural trades, primarily related to concrete and foundation work. Meanwhile, price increases in Québec were driven by insurance and labour.

With building activity remaining robust in the Prairies, the structural trades experienced similar cost pressures across the region, though the increases were not as pronounced as those in London or Québec.