Softness in Construction Spending Predicted Through 2026, Consensus Construction Forecast Reports
WASHINGTON – January 21, 2025 – After increasing by almost 20% in 2023 and another 6% last year, construction spending for nonresidential buildings—commercial, industrial, and institutional facilities—is projected to slow dramatically in 2025 and 2026. Panelists in The American Institute of Architects’ latest Consensus Construction Forecast expect a modest outlook on construction spending activity.
The Consensus Construction Forecast expects gains of only 2.2% this year and 2.6% in 2026. Spending on institutional facilities is projected to see the strongest gains of 6.0% this year while commercial construction spending is expected to increase by only 1.7% in 2025.
The Consensus Construction Forecast panelists, a group comprised of the leading construction forecasters from across the country,
- Projected gains not expected to increase construction volume: Increases in construction spending so modest that they likely won’t even cover rising material and labor costs
- Increase in spending on offices due to data centers: Overall weakness in that market but projected increase is coming from strong spending on data centers
- Warehouse construction has driven retail and commercial growth, expected to slow: Warehouse construction has become overbuilt in many areas of the country
- Health care and education poised for health gains: The major institutional sectors less prone to boom and bust pattern
“The modest outlook is partly based on a few expected headwinds to building activity, including potential tariffs on imports,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “There is also policy concern around how the construction labor force might be impacted by emerging immigration policy. Construction sector spending has been exceedingly strong – albeit unusually unbalanced – and coupled with these headwinds the projections are only very modest gains the next two years.”
View the January 2025 Consensus Construction Forecast for full details.
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