U.S. highway construction costs rose 32% from fiscal year 2022 through fiscal year 2025, even as the annual increase slowed to 0.6% in the final year. Meanwhile, diesel and asphalt producer-price indexes climbed sharply through August 2026. The pressure comes as federal highway funding remains uncertain: approval, grant announcements, binding obligations and cash payments are different stages, and higher costs reduce what a fixed amount of funding can buy.
Costs are still high, although the increase slowed
The latest complete federal highway construction cost data show a steep rise over several years followed by a sharp slowdown. The Bureau of Transportation Statistics (BTS) says its highway construction cost measure increased 32% from fiscal year (FY) 2022 through FY 2025, compared with 6% during the FY 2013–2015 MAP-21 period and 16% during the FY 2016–2020 FAST Act period. From FY 2021 through FY 2025, costs rose 63%, reducing the amount of highway infrastructure funding recipients could buy. BTS’s July 30, 2026 analysis uses the latest complete fiscal-year cost data available at the time.
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The annual pattern matters: BTS reports increases of 24% from FY 2021 to FY 2022, 20% from FY 2022 to FY 2023, and 9% from FY 2023 to FY 2024, followed by 0.6% from FY 2024 to FY 2025. That final figure signals slower growth in the index, not a return to earlier price levels. The National Highway Construction Cost Index (NHCCI) tracks prices paid by state transportation departments for roadway construction materials and services; it is not a contractor’s invoice or a measure of every firm’s actual costs. FHWA describes the NHCCI as a tool for tracking highway construction price changes and converting current-dollar expenditure to constant dollars.
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Fuel affects the cost of moving workers, equipment and materials, while asphalt is a major paving input. The Association of General Contractors of America (AGC) reported that the producer price index for diesel fuel rose 77.8% between August 2025 and August 2026; its index for liquid asphalt increased 16.4% over the same year-over-year period. Those are producer-price indexes, not a claim that every contractor’s diesel bill or asphalt purchase rose by those percentages. AGC’s September 10 release also says its broader index for inputs to new nonresidential construction rose 8.9% year over year; that measure covers more than road work.
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BTS notes that crude oil is a component of asphalt and that asphalt was the largest contributor to quarterly highway construction cost increases during parts of FY 2022 and FY 2023–24. Its analysis says the asphalt producer price index rose 8% from the first to the second quarter of FY 2026. But highway construction cost data for the first two quarters of FY 2026 were not yet available in that analysis, so the eventual effect of 2026 crude-oil price movements on the highway cost measure was not established.
Cost pressure can disrupt project plans
In a recent survey cited in its September release, AGC said 55% of respondents reported projects cancelled, postponed or scaled back in the preceding six months, and one-third attributed disruptions to rising costs. These are survey findings, not a national census of road projects or proof that fuel alone caused the reported changes.
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What the highway funding gap does—and does not—mean
The phrase “funding gap” can describe several different things. For 2024, the Federal Highway Administration (FHWA) reports $325 billion in total government revenue dedicated to highways and $332 billion in expenditures. Governments covered the difference by drawing on highway reserve accounts. This is a national comparison of government finances—not evidence that the full difference went unpaid, or that a particular contractor or project was shorted. FHWA says state and local governments are the larger sources of highway receipts and spending. Its 2026 highway finance report provides the figures.
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Federal infrastructure money also moves through distinct stages. A grant announcement is not the same as an obligation, which is a binding agreement to spend money for an agreed purpose; an outlay is money actually paid. USDOT’s IIJA status page displayed figures as of July 31, 2026: $545,688,572 in adjusted authority, $510,800,038 in grants announced, $412,832,827 obligated and $254,288,718 outlayed. The page also showed 75.65% obligated and 46.60% outlayed. These are the displayed figures on the status page, not amounts that should be assumed to represent payments to contractors. USDOT’s funding status page distinguishes these measures.
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That distinction helps explain why an infrastructure funding law does not remove near-term uncertainty for every highway program. In an October 1, 2026 statement, AGC said a short-term federal highway funding extension beginning that day omitted funding for several key programs, including the Bridge Formula Program, and characterized the result as a decrease in federal infrastructure funding. That is AGC’s assessment of the extension, not a neutral finding by a federal agency. AGC chief executive officer Jeffrey D. Shoaf said, “Congress is leaving until November without providing adequate funding for needed highway improvements.”
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Spending trends are mixed, not uniformly down
Construction spending data cited by AGC show different movements depending on the measure and period. Overall construction spending rose 0.9% from July to August 2026 but remained 1.7% below August 2025. Highway and street construction spending was 0.1% above July and 4.4% above August 2025, according to AGC’s October 1 analysis. These public spending figures do not by themselves establish how much any individual contractor has booked, been paid or can afford to build.
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AGC chief economist Ken Simonson said, “It is encouraging to see several construction segments stabilized or turned positive in August,” while warning that categories remained exposed to workforce shortages, increasing materials costs and interest rates, and federal funding uncertainty. His remarks are the association’s interpretation of the spending data, rather than a forecast that every project or market segment will contract. For state-reported highway revenue, transfers, debt, capital outlays and expenditures, FHWA’s highway finance program is a reference point.
What the figures mean as the season winds down
The national evidence points to a combination of accumulated construction-cost inflation, volatile input prices and uncertainty about the timing and coverage of public funding. Slower growth in the latest complete NHCCI year does not erase the prior increases, and an announced grant is not cash already paid. The figures describe national indexes and government spending; they do not identify a specific state’s construction-season end date or establish what a particular road builder experienced in 2026.
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