2026 Construction Industry Forecast
Resilience and innovation can help companies position themselves for success in the coming year
Bottom line
Economic headwinds persist, but growth remains possible
The U.S. construction industry faces slowing economic momentum, high interest rates, and tariff uncertainty. GDP growth for 2026 is projected at just 2.3%, signaling modest expansion amid fiscal challenges like rising deficits and debt.
Labor and cost pressures demand strategic action
Immigration policy shifts and aging workforce trends are tightening labor supply, while material costs continue to rise under aggressive trade policies. Experts urge firms to prioritize cost control, workforce upskilling, and automation to maintain competitiveness.
Bright spots: Data centers and institutional projects
Despite overall softness, data center construction is booming—up 33% in 2025 and projected to grow another 20% in 2026—driven by AI demand. Institutional sectors like health care and education show resilience, though demographic and funding challenges temper long-term outlooks.
Read the entire article at Glass Magazine
Tariffs Push Construction Materials Prices Higher in November
| Construction input prices increased 0.6% in November compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices also increased 0.6% for the month.Overall construction input prices are 3.4% higher than one year ago, while nonresidential construction input prices are 3.8% higher. Prices increased in 2 of 3 energy categories last month. Natural gas and unprocessed energy materials prices were up 10.8% and 1.4%, respectively, while crude petroleum prices were down 1.1% in November.
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| Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index. |
ABC’s Construction Backlog Indicator Inches Higher in December, Fueled By Data Center Momentum
ABC’s Construction Confidence Index reading for sales, profit margins and staffing levels increased in December but are all down on a year-over-year basis. The readings for all three components remain above the threshold of 50, indicating expectations for growth over the next six months.
“Backlog fell sharply for smaller contractors during 2025,” said ABC Chief Economist Anirban Basu. “That decline was largely due to the fact that nonresidential construction momentum is confined to the data center segment, and those projects are far more beneficial for the largest contractors. In December, the 13% of ABC members under contract to work on a data center project had significantly higher backlog (11.0 months) than those who were not (7.8 months). While contractor confidence improved slightly for the month, it remains well below late-2024 and early-2025 levels.”
Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month’s work under contract based on the latest financials available, while CCI measures contractors’ outlook for the next six months. View the methodology for both indicators.
Increase in extreme weather negatively influences the global supply chain, report finds
The report found that extreme weather has a 93% threat level, as severe weather events increase in frequency and intensity around the world, negatively affecting Americans financially.
Everstream Analytics released its 2026 risk report determining that extreme weather is the second-biggest threat to the global supply chain, right behind geopolitical tensions.
The report found that extreme weather has a 93% threat level, as severe weather events increase in frequency and intensity around the world, negatively affecting Americans financially.
“We’ve seen this accelerating trend with extreme weather events on energy, on agriculture, on people,” Everstream Analytics Chief Meteorologist Jon Davis said. “And the real concern looking ahead to this year…we will continue to see an acceleration of those extreme weather events that have ramifications financially and with all aspects within the supply chain.”
A neighborhood destroyed in the aftermath of Hurricane Ian in Fort Myers, Florida. (RICARDO ARDUENGO/AFP / Getty Images)
According to the report, which was based off the company’s machine learning algorithm, within the last decade, tropical cyclones have been the leading cause of supply chain losses around the world, while strong wind events associated with non-tropical cyclones are the second-largest contributor.
“It’s the lingering effect of those overall situations. They have major ramifications in the supply chain,” Davis said in an interview with FOX Meteorologist Bob Van Dillen.
Other weather events, including flash flooding, have increased since the turn of the century. Economic losses from floods rose from $33 billion in 2000 to an average of $42 billion in later years. That is a 27% increase.
In Europe, for years, flooding disasters have been one of the leading causes of economic impacts, but in the summer of 2025, drought, heat and flash floods resulted in almost $50 billion in losses.
Recently, the agricultural supply chain has been experiencing the worst impacts from the increase of extreme weather.
Just last year, the global wheat harvest was 18% below its early average due to droughts in major producing areas causing food prices to increase.
The decline in the agriculture supply chain has also influenced pharmaceuticals, skincare, biofuels, certain resin and plastic products.
“It goes far beyond food and beverages, things that we eat. It also goes into every little aspect within the supply chain,” Davis said.
The continuous disruption to the agriculture supply chain will result in price hikes as different industries compete for the same limited product.
This image comes from drone video showing the scope of flooding after a levee failed in Tennessee.
(Jacob Fulbright via Storyful / FOX Weather)
This was evident with cacao in late 2024, when many markets faced a high demand for the commodity. Prices rose by almost 300% due to a decline in production caused by devastating weather, combined with the surge in demand.
Eversteam Analytics predicts that this is only going to get worse in 2026.
“When you tend to get any kind of issues where you have scarcity in commodities and scarcity in products, then it becomes a situation where all of these sectors will compete to get those commodities and those products,” Davis said.
The company preaches that traditional weather risk management is no longer practical in today’s environment.
Everstream Analytics said that companies must invest in advanced climate modeling and real-time weather monitoring systems in order to be proactive when it comes to extreme weather.
“Building climate resilience requires fundamental changes to supply chain design, including geographic diversification, increased inventory buffers, and flexible logistics networks that can rapidly reroute around weather-impacted areas.” Everstream Analytics states in the report.
Dodge Momentum Index Jumps 7% in December as Nonresidential Planning Accelerates
Network grew 7.0% in December to 296.8 (2000=100) from the upwardly revised November reading of 277.4. Over the month, commercial planning improved 3.5% and institutional planning increased by 14.9%. In 2025, the DMI was up 37% from the average reading in 2024. The commercial portion was up 35% and the institutional portion was up 43% over the same period.
“Nonresidential construction starts (excluding manufacturing and transportation) are projected to accelerate in 2027 alongside sustained planning momentum in data center, healthcare and recreational building construction throughout 2025,” stated Sarah Martin, Associate Director of Forecasting at Dodge Construction Network. “Inflationary pressures will further support nominal activity levels, even as economic risks remain elevated. Notably, projects moved through the planning process marginally quicker in 25-Q4 (16 months vs. 18 months in 25-Q3), offering a modest boost to our near-term outlook.”
On the commercial side, planning momentum accelerated most strongly for warehouses, office buildings and data centers. Within institutional planning, education and recreational building activity showed the strongest growth, while planning for public buildings pulled back after elevated activity in mid-2025. Year-over-year, the DMI was up 50% when compared to December 2024. The commercial segment was up 45% (+30% when data centers are removed) and the institutional segment was up 60% over the same period.
A total of 34 projects valued at $100 million or more entered planning throughout December. The largest commercial projects included four phases of the Google Data Center Campus in Summit, Oklahoma – each valued at $500 million dollars. Additionally, Phases 2 and 3 of the Central Park Data Information Processing Center in Loxahatchee, Florida entered planning – valued at $473 million and $431 million respectively. The largest institutional projects to enter planning were the $450 million Atrium Health Hospital in Fort Mill, South Carolina, the $295 million St. Joseph Hospital Tower (Phase 2 Expansion) in Stockton, California, and the $182 million SunRay Casino and Park in Clovis, New Mexico.
The DMI is a monthly measure based on the three-month moving value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year to 18 months.
AIA
Architecture firm billings remained soft in November
The AIA/Deltek Architecture Billings Index (ABI) score for the month remained well below the 50 level at 45.3 (a score over 50 indicates billings growth). This marked the 13th consecutive month of declining billings at architecture firms, and the 35th month of a score below 50 out of the last 38. Inquiries into new projects only increased modestly this month, and the value of newly signed design contracts continued to soften. Until work in the pipeline starts to pick back up, firms are unlikely to see a significant increase in their billings.
While business conditions at architecture firms have been soft in most sectors this year, the Midwest remained a bright spot in November. Billings increased at firms located in that region for the third consecutive month, and more firms reported growth this month than last month. However, billings continued to decline at firms located in all other regions of the country, particularly at firms located in the Northeast and the West. Firms of all specializations also saw billings continue to contract in November.
