Tariff policy is affecting construction costs nationally and in Colorado specifically. The numbers below are sourced from government and industry reports. How they affect your specific projects will depend on your scope, your suppliers, and your timing.
Colorado-Specific Data
A Colorado Office of State Planning and Budget report found that Colorado’s average tariff rate on all imports increased sevenfold between 2024 and 2025, from 3% to 21%.
Before tariffs were implemented, the state had anticipated a 3.9% increase in new housing construction permits in 2025, followed by a 7.7% rebound in 2026. Those projections have since been revised downward to approximately 0.5% growth, with permits now expected to cap near 2024 levels.
National Construction Cost Estimates
The National Association of Home Builders estimates that recent tariff actions could add $7,500 to $10,000 or more to the construction cost of an average new single-family home. Aluminum, copper, and steel parts are subject to a 50% tariff. Kitchen cabinets and vanities from some countries face tariffs up to 25%.
Denver Market Outlook
Denver construction costs are expected to remain high in 2026, with tariffs, labor shortages, and material costs continuing to pressure project budgets. Industry observers note that costs may not rise as sharply as in earlier cycles, but are also not expected to come down in a meaningful way.
Developers are responding with fewer speculative starts, more phased development, and a greater emphasis on adaptive reuse.
Supply Side Consideration
Some analysts have noted that if construction costs rise too high or economic uncertainty makes builders cautious, fewer new projects may start. Reduced new supply, paired with growing demand, could put upward pressure on rents over time.
However, if higher housing costs continue, some localities may respond with rent control policies as they did following pandemic-era rent increases. That is a factor worth monitoring if you own or are considering multifamily assets.
What to Consider
The tariff landscape is still evolving. Rates, exemptions, and trade agreements are subject to change. If you are budgeting a rehab or new construction project in 2026, getting current material quotes from your suppliers rather than relying on prior estimates is advisable.
Consult your contractor and a financial advisor before finalizing any project pro forma.
