Highway Construction Costs Shrank Again in Jan.-Mar. Quarter
The recent update to the Federal Highway Administration’s National Highway Construction Cost Index reveals that the cost of building roads decreased significantly in the three-month quarter of January-March 2026. However, the next quarter is expected to reverse those results, because the next quarter will start to show the effect of the skyrocketing prices for diesel fuel and asphalt caused by the Iran War.
The raw NHCCI for the quarter was 3.1348, which was a 2.70 percent decrease from the prior quarter (an annualized decrease of 10.81 percent). This followed up an adjusted prior quarter decrease of 2.56 percent (annualized to 10.24 percent).
More importantly, unlike in the previous few quarters, this quarter’s raw index lines up closely with the seasonally adjusted index (outdoor construction is, of course, seasonal) – the seasonally adjusted NHCCI was 2.51 percent below its prior-quarter counterpart.
National Highway Construction Cost Index |
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Raw Index |
Seasonally Adjusted |
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| Quarter | Index | ∆ vs PQ | Index (SA) | ∆ vs PQ |
| Jan.-Mar. 2025 | 3.1628 | -2.16% | 3.2178 | -1.29% |
| Apr.-Jun. 2025 | 3.2104 | +1.50% | 3.2198 | +0.06% |
| Jul.-Sep. 2025 | 3.3065 | +2.99% | 3.2303 | +0.32% |
| Oct.-Dec. 2025 | 3.2218 | -2.56% | 3.2470 | +0.52% |
| Jan.-Mar. 2026 | 3.1348 | -2.70% | 3.1655 | -2.51% |
Over time, the raw and seasonally adjusted NHCCI’s track fairly closely (since the end of 2020, the raw NHCCI is up 68.5 percent and the seasonally adjusted index is up 67.6 percent.)
By converting each quarter’s nominal obligations for new highway contracts signed/project agreements executed by the Federal Highway Administration (taken from the usaspending.gov website) and dividing that by a rebased NHCCI, we can see how much of the buying power of the 2021 infrastructure law has been lost to construction cost inflation.
We rebase to the April-June 2021 quarter, which is when Senators set the funding parameters of the bill and decided precisely how much to spend on highways, electric grid, rail, etc. And we start recording the obligations at the start of fiscal year 2022, the first year of IIJA funding.
To date, FHWA has incurred $287.4 billion in new obligations, excluding supplemental appropriations for emergency relief, since October 2021. But that is the nominal number. When converted, quarter-by-quarter, to April-June 2021 dollars using raw NHCCI, we find the real value of the highway funding provided by the IIJA shrinking down to $194.0 billion. This is a decrease of $93.5 billion. Another way to put it: 32.5 cents out of every dollar provided by the IIJA to the Federal Highway Administration has been lost to highway construction cost inflation.
