U.S. construction starts ended 2025 on a stronger note, driven largely by infrastructure spending and continued momentum in data center development, according to new data from Dodge Construction Network. While the late-year pickup provided some optimism, the broader nonresidential building market outside of data centers remained uneven.
Total construction starts increased 2.6% month over month in December to a seasonally adjusted annual rate of $1.24 trillion. The gain was fueled primarily by nonbuilding construction, including highways and bridges, as well as continued strength in the data center sector. In contrast, nonresidential building starts declined 6.6% month over month during the same period, Dodge reported.
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Despite the December softness, full-year data pointed to firmer footing for nonresidential construction in 2025. Overall groundbreaking activity increased 4.5% for the year, supported by a 10.9% year-over-year rise in commercial construction. Institutional sectors such as healthcare and education, however, posted a 1.9% decline for the year.
“Nonbuilding construction, alongside data centers, was the primary engine of growth in 2025, supporting a 5.4% expansion in the total dollar-value of starts,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “In square footage terms, however, building starts declined 4.7% alongside weaker residential, manufacturing, and institutional activity.”
The December decline in nonresidential starts was driven in large part by sharp pullbacks in manufacturing and education construction. Manufacturing groundbreakings fell 30.8% month over month, while education projects declined 18.2% during the same period.
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Other commercial segments, however, posted strong gains. Hotel construction surged 74.4% month over month in December, helping offset some of the broader weakness and highlighting the uneven nature of the current construction landscape.
Several large-scale projects broke ground in December, underscoring the continued influence of megaprojects on overall activity. Among the largest starts were the $3.5 billion Port Authority Midtown Bus Terminal redevelopment in New York City, the $1.6 billion Entergy Legend Power Station in Port Arthur, Texas, and the $1.5 billion LAX Airport Roadway Improvements project in Los Angeles. Data center construction also featured prominently, including projects from Google and CyrusOne in Arkansas and Texas.
Nonbuilding construction, which includes infrastructure projects, posted the strongest gains at year’s end. Groundbreakings jumped 16.3% month over month in December, led by an 85.2% surge in highway and bridge construction. On a full-year basis, nonbuilding starts increased 18.7% compared with 2024, according to Dodge.
Residential construction showed modest improvement to close the year, rising 1% month over month in December. The gains were uneven, however, as single-family starts fell 4.5% for the month while multifamily construction increased 10.2%.
For the full year, residential construction activity trailed 2024 levels by 4.8%. Single-family housing accounted for most of the decline, dropping 13.2% year over year. Multifamily construction, by contrast, increased 13.1% in 2025, reflecting continued demand in higher-density housing markets.
Overall, the data suggest that while infrastructure investment and data centers continue to provide a foundation for growth, many segments of the construction industry are entering 2026 facing a more selective and uneven project pipeline.
Originally reported by Sebastian Obando, Reporter in Construction Dive.
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