Construction Industry Conference - Virtual-1 - Wilkins

1 - Wilkins - U.S. Construction Outlook

Pdf Summary

The U.S. construction outlook for the rest of 2026 is mixed, with slow growth and significant risks. Nonresidential construction employment rose 2.9% year over year through September, while residential employment declined 1.0%. Job growth varies widely by state, and contractors still report difficulty filling both salaried and craft positions. Hiring and layoffs are both relatively subdued, but worker shortages continue to delay projects.<br /><br />Construction spending fell 1.7% from August 2025 to August 2026. Private residential spending dropped 4.8%, while private nonresidential spending slipped 0.1%; public spending increased 2.5%. Performance differs sharply by segment: data-center spending surged 73%, and power construction rose 9%, while manufacturing fell 19%, and warehouse, office, and several other categories weakened.<br /><br />Costs are rising again. Prices for inputs to nonresidential construction were up 12% year over year and 58% since February 2020. Tariffs and geopolitical conflict are adding pressure, particularly on metals and fuel, while electrical equipment remains a notable supply-chain constraint.<br /><br />The outlook anticipates gradual improvement in single-family housing if mortgage rates remain stable, with multifamily construction nearing a bottom. Data centers, power, airports, and specialty health care are among the strongest prospects; manufacturing may also benefit from data-center, power, and defense-related investment. Conversely, warehouses and offices are expected to remain weak through 2026.<br /><br />Overall, economic growth is uneven and vulnerable to geopolitical shocks. Construction labor costs are expected to rise 4–5%, and material costs 3–6%, with greater increases possible if Middle East conflicts persist. Immigration enforcement may further constrain labor availability.

Keywords

U.S. construction outlook

nonresidential construction

residential employment

construction spending

labor shortages

data center spending

power construction

material costs

tariffs and supply chain

2026 forecast